CHAPTER TWO

STRATEGY FORMULATION: THE BUSINESS MISSION, VISION AND

VALUE

2.1 Vision
Vision - A vision statement is a mental picture of what you want to accomplish or achieve.
A vision statement is a future-oriented declaration of the organization’s purpose and aspirations.
A vision is an attempt to articulate what a desired future for a company would look like.
 It gives the company direction and it's the basic premise for the success of the mission
statement
 An organizational dream - it stretches the imagination and motivates people to rethink
what is possible
 A vision is not the same as a mission, strategic objectives, or philosophy
 Visions tend to be evocative, rather than precise.
Vision Statement Should Answer:“What do we want to become?”,How will we do it?, For
whom will we do this?, What makes us different?, What do we wish to become in the
future?What and how do we want to be?
Examples of Vision Statement:
 Land O’Lakes: Be one of the best food and agricultural companies in the world
by being: Our customers' first choice; our employees' first choice; Responsible to
our owners; and A leader in our communities.
 McDonalds: Be the world's best quick service restaurant experience
 Henry Ford: Make the automobile accessible to every American
Vision statement is also captured in a short tag line, such as:
 Toyota’s “moving forward” statement that appears in most communications to
customers, suppliers, and employees.
 Similarly, Wal-Mart’s tag-line version of its vision statement is “Save money. Live
better.”

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2.2 Mission Statement

Mission – is the general statement of how you will achieve your vision.
It expresses the essential characteristics of the organization, the reasons for its existence, the
nature of its business, the groups who are served by the company (its corporate responsibilities),
and the principles/values under which it operates. It becomes the definition of the company, the
declaration of its corporate identity.

A personal mission or a farm business mission statement deals with questions like, “Why are we
here?”, “Why do we exist?”, “Why do we get up each day and do what we do?”, “What is it that
we get paid for?”, “What function does the organization perform?, For whom?, and How?” The
mission is a broad statement of personal or business scope, purpose and operation that
distinguishes me, or my farm, from others.

 It is an enduring statement of purpose that distinguishes one organization from other

similar enterprises.
 It also called; Creed statement, statement of purpose, statement of philosophy, statement
of beliefs, statement of business principles, and a statement “defining our business
 A mission statement is a brief explanation of the organization's purpose, It tells who we
are and what we are.
 Should articulate the principles that will guide the business and its employees to grow,
advance, and prosper.
A mission statement should include:
 social responsibility  identify customers and markets
 quality  identify products and/or services
 commitment to survival, growth, and  family values
 profitability
 Mission statement should not designate; Details, Timetable, Assignments, Measurements and
Tasks.

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Examples of Mission Statements
McDonalds Mission: Be the best employer for our people in each community around the world,
Deliver operational excellence to our customers in each of our restaurants; and achieve
enduring(lasting) profitable growth by expanding the brand and leveraging the strengths of the
McDonald's system through innovation and technology.

Wendy’s Mission:Our guiding mission is to deliver superior quality products and services for
our customers and communities through leadership, innovation and partnerships.
Land O’Lakes Mission: We are a market- and customer-driven cooperative committed to
optimizing the value of our members' dairy, crop and livestock production.

Our mission is to operate a dairy farm that will provide: Financial success through the marketing
of high quality milk; a high standard of living for our family and a comfortable retirement for
family farm participants.
2.2.1 Characteristics of Good Mission Statements

To create a successful mission statement, you should keep the following concepts in mind.

 Simple - Your mission statement should be simple. However, creating the statement is
usually not easy. It may require several drafts. The statement needs to capture the very
essence of what your business or organization will achieve and how you will achieve it.
 The statement should be short and concise. The fewer words the better. Use just enough
words to capture the essence. Most mission statements are too long. People tend to want to
add additional information and qualifications to the statement. Usually these statements just
confuse the reader and cloud the real meaning of your statement. Each successive draft of
your statements should be to simplify and clarify by using as few words as possible.
 Your statements of vision and mission should be a single thought that can easily be carried
in the mind. To test the effectiveness of a mission statement in a business, ask its leaders,
managers and employees to tell you the vision and mission of their business. If they cannot
instantaneously tell you both, their mission statement is of little use. The vision and mission
guide the everyday activities of every person involved in the business. To be effective, your
statements need to short and simple, capturing the essence of what you want to accomplish.
 Fluid Process - People agonize (path through mental pain) over writing mission statements.
Granted, it is usually not a simple or easy process. However, the statements are not “cast in

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 stone”. They can be updated and modified later. It is often best to do the best job of writing it
as you can, use the statement for a period of time, and then revisit it a few months or a year
later. It is often easy to sharpen the statement at that time. Remember, the reason you are
writing the statement is to clarify what you are doing.
 Unique Businesses - It is usually more important to write mission statements for unique or
non-traditional businesses where the purpose of the business is not generally known.
Mission statements are important for these businesses so that everyone involved in the
business understands what the business will accomplish and how it will be accomplished.
In essence this means “keeping everyone on the same page” so they are all “pulling in the
same direction”.
2.2.3 Benefits of Mission Statements

 Better financial results  Focal point for individuals

 Unanimity of purpose  Establishment of work structure
 Resource allocation  Basis of assessment and control
 Establishment of culture  Resolution of divergent views

Vision versus Mission

In many ways, you can say that the mission statement lays out the organization’s “purpose for
being,” and the vision statement then says, “Based on that purpose, this is what we want to
become.”

A mission statement communicates the organization’s reason for being and how it aspires to
serve its key stakeholders.

The vision statement is a narrower, future-oriented declaration of the organization’s purpose

and aspirations.

2.2.4 Roles Played by Mission and Vision

Mission and vision statements play three critical roles: (1) communicate the purpose of the
organization to stakeholders, (2) inform strategy development, and (3) develop the
measurable goals and objectives by which to gauge (measure) the success of the

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 organization’s strategy. These interdependent, cascading roles, and the relationships among
them, are summarized in the figure.

Figure 2.1Key Roles of Mission and Vision

 First, mission and vision provide a vehicle for communicating an organization’s purpose
and values to all key stakeholders.
 Second, mission and vision create a target for strategy development. That is, one criterion
of a good strategy is how well it helps the firm achieve its mission and vision. To better
understand the relationship among mission, vision, and strategy, it is sometimes helpful to
visualize them collectively as a funnel. At the broadest part of the funnel, you find the
inputs into the mission statement. Toward the narrower part of the funnel, you find the
vision statement, which has distilled down the mission in a way that it can guide the
development of the strategy. In the narrowest part of the funnel you find the strategy.
 Third, mission and vision provide a high-level guide, and the strategy provides a specific
guide, to the goals and objectives showing success or failure of the strategy and satisfaction
of the larger set of objectives stated in the mission. In the cases of both Starbucks and
Toyota, you would expect to see profitability goals, in addition to metrics on customer and
employee satisfaction, and social and environmental responsibility.

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2.3 Business Values

• Define the group beliefs, and rules that control the management of the company. It
represents the institutional philosophy and the support to the cultural organization.

• The main objective of corporative values is to have a framework of reference that inspire
and control the life of a company.

2.3.1 Basis for values

• Orientation and commitment to customers

• Sustainability.

• Interest in the people

• Social responsibility.

• Integrity.

• Team work

• Respect to people

Examples of values:

Ambition, competency, individuality, equality, integrity, service, responsibility, accuracy,

respect, dedication, diversity, improvement, enjoyment/fun, loyalty, credibility, honesty,
innovativeness, teamwork, excellence, accountability, empowerment, quality, efficiency, dignity,
collaboration, stewardship, empathy, accomplishment, courage, wisdom, independence, security,
challenge, influence, learning, compassion, friendliness, discipline/order, generosity, persistency,
optimism, dependability, flexibility.

2.3.2 Benefits of values

• People demonstrate and model the values in action in their personal work behaviors,
decision making, contribution, and interpersonal interaction.

• Organizational values help each person establish priorities in their daily work life.

• Values guide every decision that is made once the organization has cooperatively created
the values and the value statements.

Rewards and recognition within the organization are structured to recognize those people whose
work embodies the values the organization embraced

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 • Organizational goals are grounded in the identified values.

• Adoption of the values and the behaviors that result is recognized in regular performance
feedback.

• People hire and promote individuals whose outlook and actions are congruent with the
values.

• Only the active participation of all members of the organization will ensure a truly
organization-wide, value-based, shared culture.

2.4 Strategic Planning Issues

• Many companies have a problem with the actual planning system. It often breaks down
because of faulty preparation and implementation

1. Line managers not involved

2. Business units not designed correctly

3. Action steps not defined in detail

4. Strategic plans not integrated with other organisational controls like budgeting

5. Objectives not defined properly by top management

• However, the “how to do it” in practice varies significantly between companies – there is
no one “right” solution.

2.5 Setting Goals and Objectives

Once you have developed your vision and mission, you can then develop the goals and
objectives needed to achieve your vision.

I) Goals: Goals are general statements of what you want to achieve. So they need to be
integrated with your vision. They also need to be integrated with your mission of how
you are going to achieve your vision.

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Examples of company goals are:

 To improve profitability  To provide better customer service

 To increase efficiency  To improve employee training
 To capture a bigger market share  To reduce carbon emissions

A goal should meet the following criteria:

 Suitable: Does it fit with the vision and mission?

 Acceptable: Does it fit with the values of the company and the employees?
 Understandable: Is it stated simply and easy to understand?
 Flexible: Can it be adapted and changed as needed?

Make sure the goals are focused on the important properties of the business. Be careful not to set
too many goals. You run the risk of losing focus. Also, design your goals so that they don’t
contradict and interfere with each other.

II) Objectives: Objectives are specific, quantifiable, time-sensitive statements of what is

going to be achieved and when it will be achieved. They are milestones along the path of
achieving your goals.

Examples of company objectives are:

 To earn at least a 20 percent after-tax rate of return on our net investment during the next
fiscal year
 To increase market share by 10 percent over the next three years.
 To lower operating costs by 15 percent over the next two years by improving the efficiency of
the manufacturing process.
 To reduce the call-back time of customers inquiries and questions to no more than four hours.

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Objectives should meet the following criteria:

 Measurable: What will happen and when?

 Suitable: Does it fit as a measurement for achieving the goal?
 Feasible: Is it possible to achieve?
 Commitment: Are people committed to achieving the objective?
 Ownership: Are the people responsible for achieving the objective included in the objective-
setting process?