BP_STRA311-Strategic Management

Chapter 2-The Business Vision and Mission

Dr. Rommel Joseph G. Lazatin____________________________________________________________________

What do we want to become?

A Vision statement should answer the question “ What do we want to become?” a clear vision provides
the foundation for developing a comprehensive mission statement. Many organizations have both vision and
mission statement, but the vision statement should be establish first and foremost. The vision statement should
be short , preferably one sentence, and as many managers as possible should have input into developing the
statement.
What is our business?
Drucker says that asking the question “What is our business” is synonymous with asking the question
“What is our mission?” an enduring statement of purpose that distinguishes one organization from other similar
enterprises, the mission statement is a declaration of an organization’s “reasons for being”. A clear mission
statement is essential for effectively establishing objectives and formulating strategies.
Sometimes called creed statement, a statement of purpose, a statement of philosophy, a statement of
beliefs, a statement of principles, or a statement “defining our business,” a mission statement reveals what an
organizations want to be and whom it wants to serve. All have reason for being, even If strategists have not
consciously transformed this reason into writing.

Vision versus Mission

Many organization develop both a mission statement and a vision statement. It can be argued that profit,
not vision or mission, is the primary corporate motivator. But profit alone is not enough to motivate people.
Profit is perceived negatively by some employees in companies. Employees may see profit as something that
they earn and management then uses and even gives away to shareholders. Although this perception is
undesired and disturbing to management, it clearly indicates that both profit and vision are needed to motivate
workforce effectively.
When employees and managers together shape or fashion the mission and vision statements for a firm,
the resultant document can reflect the personal visions that managers and employees have in their hearts and
minds about their own futures. Shared vision creates a commonality of interest that can lift workers out of the
monotony of daily work and put them into a new world of opportunity and challenge.

Characteristic of a Mission statement

A mission statement is more than a statement of specific details.it usually is broad in scope for at least
two major reasons. First, a good mission statement allows for the generation and consideration of a range of
feasible alternative objectives and strategies without unduly stifling management creativity.
Second, a mission statement needs to be broad to reconcile differences effectively among, and appeal to,
an organizations diverse stakeholders.
Components of a Mission Statement
Mission statements can and do vary in length, content, format, and specificity. Most practitioners and
academicians of strategic management feel that an effective statement should include nine components.
1. Customers- Who are firm’s customers?
2. Products or Services- what are the firms major products or services?
3. Markets- Geographically where does the firm compete?
4. Technology- is the firm technologically current?
5. Concern for survival, growth and profitability- Is the firm committed to growth and financial
soundness?
6. Philosophy – what are the basic beliefs, values, aspirations 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 concerns?
9. Concern for employees- are employees a valuable asset of the firm?

Mission Statements example

Dell’s mission is to be the most successful company ( ) in the world( ) at delivering the best customer
experience in markets we serve( ). In doing so, dell will meet customer 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( ).

Procter and 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 shareholder, and the communities( ) in which we live
and work to prosper.

At L’Oreal, we believe that lasting business success is built upon ethical( ) standards which guides growth and
on a genuine sense of responsibility to our employees( ), our consumers, our environment and the communities
in which we operate( ).
 Strategic Management Paper
Checklist of Content
I. Executive Summary
II. Company Profile
III. VMG Analysis
a. Mission & Vision Statement
b. Objectives/Goals

IV. External Assessment

a. Political Environment
b. Economic Environment
c. Socio-cultural Environment
d. Technological Environment
e. Environmental Environment
f. Legal Environment

V. Internal Assessment
a. Management
1. Organizational Structure
b. Marketing
1. Products/Services
2. Pricing Strategy
3. Promotion strategy
4. Channels of Distribution
5. Target Market
6. Competition (Use Porter’s 5 forces of competitive analysis
7. Market Share

c. Finance/Accounting
1. Growth
a. Assets
b. Sales
c. Net Income
2. Profitability
a. Vertical Analysis
a.1. Gross Profit Margin Ratio
a.2. Operating Profit Margin Ratio
a.3. Net profit margin ratio
b. Returns
b.1. Return on Assets (ROA)
b.2. Return on Sales (ROS)
b.3. Return on Equity (ROE)
3. Liquidity
a. Current Ratio
 b. Quick Ratio
4. Leverage
a. Debt to Equity Ratio
b. Debt to total Assets ratio
c. Long-term debt to equity ratio
5. Efficiency Ratios
a. Fixed assets turn-over ratio
b. Total Assets Turn-over ratio

b. Returns
i. Return on Assets (ROA)
ii. Return on Sales (ROS)
iii. Return on Equity (ROE)
3. Liquidity
a. Current Ratio
b. Quick Ratio
4. Leverage
a. Debt to Equity Ratio
b. Debt to Total Assets Ratio
c. Long Term Debt to Equity Ratio
d. Times Interest Earned Ratio
5. Efficiency Ratios
a. Fixed Assets Turnover Ratio
b. Total Assets Turnover Ratio

d. Production/Operations
1. Process
2. Inventory
3. Quality
e. Research and Development
VI. STRATEGY FORMULATION
A. Input Tools
 1. External Factor Evaluation (EFE) Matrix
2. Competitive Profile Matrix (CPM)
3. Internal Factor Evaluation (IFE) Matrix
B. Matching Tools
1. Strengths-Weaknesses-Opportunities –Threats (SWOT)
Matrix
2. Strategic Position and Action Evaluation (SPACE) Matrix
3. Boston Consulting Group (BCG) Matrix
4. Internal-External (IE) Matrix
5. Grand Strategy Matrix
C. Matrix Summary
D. SWOT Summary
E. Decision Tool
1. Quantitative Strategic Planning Matrix (QSPM)
 
VII. STRATEGY IMPLEMENTATION
A. Recommended Revised Mission Statement
B. Recommended Revised Vision Statement
C. Recommended Revised Objectives
D. Recommended Revised Code of Ethics
E. Recommended Revised Organization Structure
F. Recommended Strategies
G. Recommended Departmental Plans
 
VIII. STRATEGY EVALUATION (Use Balanced Scorecard Method)

IX. APPENDICES  
A. Financial Projections
1. Projected Income Statements
2. Projected Balance Sheets
3. Projected Cash Flows
Mission Statements example

Dell’s mission is to be the most successful company (2) in the world(3) at delivering the best customer
experience in markets we serve(1). In doing so, dell will meet customer expectations of highest quality; leading
technology(4) competitive pricing; individual and company accountability (6); best-in-class service and support
(7); flexible customization capability(7); superior corporate citizenship(8); Financial stability(5).

Lacking : Concern for employees

Procter and Gamble will provide branded products and services of superior quality and value (7) that improve
the lives of the world’s(3) consumers. As a result, consumers (1) will reward us with industry leadership in
sales, profit(5), and value creation, allowing our people (9), our shareholder, and the communities(8) in which
we live and work to prosper.

Lacking: 3 components; Products, technology and philosophy

At L’Oreal, we believe that lasting business success is built upon ethical(6) standards which guides growth and
on a genuine sense of responsibility to our employees(9), our consumers, our environment and the communities
in which we operate(8).

Lacking: 6; Customers, products, markets, technology, concern, for survival, concern for public image.