Mission Statement

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Chapter 2

• Mission Statement
• Objective defining the company mission statement

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Strategic Planning as a Formula

• Getting customers Company abilities
  Competitors actions /- Industry forces
• The purpose of the strategic planning process is
  to grow profits and the business through more and
  better customers.
• During the entire process of strategic planning,
  the focus will be on the customer and getting
  customers to do business with the company.
• Therefore, the strategic plan will be based on
  the following premises

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• Premise 1 understanding the customers, and
  having the capabilities to satisfy them.
• Premise 2 understanding the industry forces at
  work, and can incorporate, adapt to, or counter
  them in order to be successful.
• Premise 3 understanding the competitors and can
  position the company against them in a manner
  that the customer perceives as important, unique
  and superior.

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Analysis

• To complete the strategic planning process, the
  following factors need to be analyzed
• The company mission, in terms of
• Goals and objectives,
• Values and Competencies,
• Strengths and weaknesses.
• The business, in terms of
• Products and services offered,
• Primary markets served

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• The customers, in terms of
• Needs,
• Desired benefits,
• Buying characteristics.
• The make-up of the business, in terms of
• Strategic business units,
• Focus.
• The make-up of the industry, in terms of
• Forces,
• Attractiveness,
• Success factors.
• The competitors, in terms of
• Pricing issues,
• Service issues,
• Quality issues,
• Areas of differentiation.

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The Mission Statement

• The mission statement can be defined as a broad
  statement of characteristics (product and
  market), goals (profit and growth), and
  philosophies of a business or simply its purpose
  and philosophies. It is an expression of the
  vision for the company. The statement lays a
  foundation for the future actions, and the major
  philosophies (values) that underlie those
  actions.
• It is also referred to as the company mission,
  mission, vision, and creed or credo.

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Importance of Mission Statements

• Firms with mission statements generally
  outperform those without one. In a study of the
  Business Week 1000, firms with mission statements
  were seen that they had an average return on
  stockholders equity of 16,6, while the return
  for those without mission statements was 9,7.
  The figures indicate a 71,1 disparity between
  the two groups of firms.

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Reasons for a Mission Statement

• To help promote clarity of purpose throughout the
  company,
• To function as a foundation point for major
  decisions,
• To motivate management and employees of the firm
  to gain commitment within the company,
• To foster understanding and support outside the
  company (helps external public relations)

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Components of the Mission Statement

• There are probably many ways to write a mission
  statement, however it should include at least the
  following
• A description of the companys current business,
• A description of the customers the company
  currently serves,
• A description of the products and services the
  company offers,
• A description of company goals where do you
  want to go?
• A description of company philosophy what values
  and beliefs underlie the business practices?
• A description of company public image how the
  company wants to be perceived?

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Central Issues in the Creation of a Mission
Statement

• Peter Drucker stresses the importance of
  answering three questions during the process of
  preparing the firms mission
• What is our business?
• What will our business be?
• What should our business be?

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What is our business?

• This must be defined based on the customers
  perception What are the key satisfactions (and
  values) derived from purchasing our product or
  service? Why do target customers purchase the
  companys products or services? Customers buy the
  satisfaction of a need the core benefit. The
  core benefit of a restaurant would be
  satisfaction of hunger?, Status? The actual
  product or value enhancing attributes would be
  quality, large plates of food, unique spices,
  fresh baked bread, a convenient location, a
  relaxing atmosphere, courteous service, fast or
  leisurely service, status or price.

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What will our business be?

• Although todays product offering may be quite
  successful, it may not elicit the same prosperity
  next year, in the future. Will restaurants
  change their present menu mix, pricing,
  promotional and distribution strategies in the
  next three to five years? Will changes in the
  economy, personnel supply or characteristics,
  societal trends or technological changes have an
  effect on managerial decisions? What current or
  future needs of customers are not currently being
  met? Are there certain features that could be
  added to the business, such as delivery, internet
  reservations or advertising, upgraded product
  quality or services, less fat, more spices, or
  market penetration in nontraditional locations.

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What should our business be?

• Are there forecasted changes in the environment
  that should be incorporated into the businesss
  current operating philosophy? If there is
  perceived opportunity for rapid expansion, should
  the firm proceed? If 50 of customers say they
  want something that no competitor is currently
  offering but the service would require a major
  change in current operating logistics, should the
  service be considered?

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Writing the Mission Statement

• To complete the mission statement, the company
  must do the following
• Assess its position by completing a SWOT
  analysis. This is an evaluation of the companys
  strengths and weaknesses, the opportunities
  available, and the threats that can impact the
  company.

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1. Review the company and identify the core values
   that it possess and deem important.
2. Identify both the quantitative and qualitative
   goals the company wants to achieve.
3. Review the examples of mission statements, and
   complete a mission statement for the company.

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Task 1 SWOT Analysis

• SWOT stands for Strengths, Weaknesses,
  Opportunities, and Threats.
• It helps to understand the environment in which
  the company operates.
• It helps the company balance the internal
  strengths and weaknesses against the
  opportunities and threats it face.
• It helps the company to identify its capabilities
  and the competitive advantages available to it.

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Task 2 Assess Core Values

• Core values (beliefs) represent the focus of the
  company.
• They indicate what is important to the company
  and what the company hopes to convey as important
  to the key parties (stakeholders).
• Core values can cover an almost infinite number
  of areas and topics. The following may give an
  idea customer-focused values, integrity-based
  values, corporate citizen values, values based on
  quality service, people-oriented values,
  action-oriented values

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Task 3 Statement of Goals

• The goals are simply the things the company wants
  to accomplish. They can be quantitative or
  qualitative.
• Quantitative goals are specific and measurable
  such as desired sales volume in 12 months/24
  months/36 months, desired earnings growth rate
  per year, desired contribution or gross margin,
  desired profit after taxes.

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• Qualitative goals reflect non-financial desires
  of the company. They, like the core values,
  reflect a philosophy or strategy that is driving
  the efforts. The following are some examples for
  qualitative goals providing employees a work
  environment that fosters innovation and pride in
  accomplishments, demonstrating and delivering
  honesty and integrity in all company
  transactions, being an active and contributing
  member of the community, focusing the companys
  efforts constantly towards superior customer
  service.

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Stakeholders

• The mission statement is generally addressed to
  the stakeholders of the company those people or
  groups that have the most to gain or lose based
  on the firms performance.
• Internal stakeholders executive officers, board
  of directors, stockholders, and employees are
  basically concerned with operating the company to
  yield the greatest reasonable profit, good pay
  and benefits, satisfactory working conditions,
  and a respectable image. External stakeholders
  customers, suppliers, creditors, competitors,
  governments, local community, general public are
  primarily concerned that the company operate for
  the good of society.