CHAPTER 2

Every organization has a unique purpose and reason for being. This uniqueness should be
reflected in vision and mission statements. The nature of a business vision and mission can represent
either a competitive advantage or disadvantage for the firm. An organization achieves a heightened
sense of purpose when strategists, managers, and employees develop and communicate a clear
business vision and mission. Drucker says that developing a clear business vision and mission is the
“first responsibility of strategists.”

A good mission statement reveals an organization’s customers; products or services; markets;

technology; concern for survival, growth, and profitability; philosophy; self-concept; concern for
public image; and concern for employees. These nine basic components serve as a practical
framework for evaluating and writing mission statements. As the first step in strategic management,
the vision and mission statements provide direction for all planning activities.

Well-designed vision and mission statements are essential for formulating, implementing, and
evaluating strategy. Developing and communicating a clear business vision and mission are the most
commonly overlooked tasks in strategic management. Without clear statements of vision and mission,
a firm’s short-term actions can be coundaADterproductive to long-term interests. Vision and mission
statements always should be subject to 1, but, if carefully prepared, they will require infrequent major
changes. Organizations usually reexamine their vision and mission statements annually. Effective
mission statements stand the test of time.

1. What are some different names for “mission statement,” and where will you likely find a firm’s
mission statement?wwww

2. If your company does not have a vision or mission statement, describe a good process for
developing these documents.

3. Explain how developing a mission statement can help resolve divergent views among managers in a
firm.

4. Drucker says the most important time to seriously reexamine the firm’s vision/mission is when the
firm is very successful. Why is this?

5. Explain why a mission statement should not include monetary amounts, numbers, percentages,
ratios, goals, or objectives.

6. Discuss the meaning of the following statement: “Good mission statements identify the utility of a
firm’s products to its customers.”

7. Distinguish between the “self-concept” and the “philosophy” components in a mission statement.
Give an example of each for your university.

8. When someone or some company is “on a mission” to achieve something, many times they cannot
be stopped. List three things in prioritized order that you are “on a mission” to achieve in life.

9. Compare and contrast vision statements with mission statements in terms of composition and
importance.

10. Do local service stations need to have written vision and mission statements? Why or why not?

11. Why do you think organizations that hagdjgdsjsve a comprehensive mission tend to be high
performers? Does having a comprehensive mission cause high performance?
12. Explain why a mission statement should not include strategies and objectives.

13. What is your college or university’s self-concept? How would you state that in a mission
statement?

14. Explain the principal value of a vision and a mission statement.

15. Why is it important for a mission statement to be reconciliatory?

16. In your opinion, what are the three most important components that should be included when
writing a mission statement? Why?

17. How would the mission statements of a for-profit and a nonprofit organization differ?

18. Write a vision and mission statement for an organization of your choice.

19. Conduct a search on the Internet with the keywords vision statement and mission statement. Find
various company vision and mission statements, and evaluate the documents. Write a one-page
single-spaced report on your findings.

20. Who are the major stakeholders of the bank that you do business with locally? What are the major
claims of those stakeholders?

21. List seven characteristics of a mission statement.

22. List eight benefits of having a clear mission statement.

23. How often do you think a firm’s vision and mission statements should be changed?

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 CHAPTER 3
Increasing turbulence in markets and industries around the world means the external audit
has become an explicit and vital part of the strategic-management process. This chapter provides a
framework for collecting and evaluating economic, social, cultural, demo- graphic, environmental,
political, governmental, legal, technological, and competitive information. Firms that do not mobilize
and empower their managers and employees to identify, monitor, forecast, and evaluate key external
forces may fail to anticipate emerging opportunities and threats and, consequently, may pursue
ineffective strategies, miss oppor- tunities, and invite organizational demise. Firms not taking
advantage of the Internet are technologically falling behind.

A major responsibility of strategists is to ensure development of an effective external- audit

system. This includes using information technology to devise a competitive intelli- gence system that
works. The external-audit approach described in this chapter can be used effectively by any size or
type of organization. Typically, the external-audit process is more informal in small firms, but the need
to understand key trends and events is no less important for these firms. The EFE Matrix and Porter’s
Five-Forces Model can help strate- gists evaluate the market and industry, but these tools must be
accompanied by good intu- itive judgment. Multinational firms especially need a systematic and
effective external- audit system because external forces among foreign countries vary so greatly.

CHAPTER 4
The Resource-Based View (RBV) approach to competitive advantage contends that inter- nal
resources are more important for a firm than external factors in achieving and sustaining competitive
advantage. In contrast to the I/O theory presented in the previous chapter, propo- nents of the RBV
view contend that organizational performance will primarily be determined by internal resources that
can be grouped into three all-encompassing categories: physical resources, human resources, and
organizational resources.5 Physical resources include all plant and equipment, location, technology,
raw materials, machines; human resources include all employees, training, experience, intelligence,
knowledge, skills, abilities; and organizational resources include firm structure, planning processes,
information systems, patents, trademarks, copyrights, databases, and so on. RBV theory asserts that
resources are actually what helps a firm exploit opportunity and neutralize threats.

The basic premise of the RBV is that the mix, type, amount, and nature of a firm’s inter- nal
resources should be considered first and foremost in devising strategies that can lead to sustainable
competitive advantage. Managing strategically according to the RBV involves developing and
exploiting a firm’s unique resources and capabilities, and continually main- taining and strengthening
those resources. The theory asserts that it is advantageous for a firm to pursue a strategy that is not
currently being implemented by any competing firm. When other firms are unable to duplicate a
particular strategy, then the focal firm has a sustainable competitive advantage, according to RBV
theorists.

The RBV has continued to grow in popularity and continues to seek a better under- standing
of the relationship between resources and sustained competitive advantage in strategic management.
However, as alluded to in Chapter 3, one cannot say with any degree of certainty that either external
or internal factors will always or even consistently be more important in seeking competitive
advantage. Understanding both external and internal factors, and more importantly, understanding
the relationships among them, will be the key to effective strategy formulation (discussed in Chapter
6). Because both external and internal factors continually change, strategists seek to identify and take
advantage of positive changes and buffer against negative changes in a continuing effort to gain and
sustain a firm’s competitive advantage. This is the essence and challenge of strategic man- agement,
and oftentimes survival of the firm hinges on this work.

Management, marketing, finance/accounting, production/operations, research and

development, and management information systems represent the core operations of most
businesses. A strategic-management audit of a firm’s internal operations is vital to organizational
health. Many companies still prefer to be judged solely on their bottom- line performance. However,
an increasing number of successful organizations are using the internal audit to gain competitive
advantages over rival firms.

Systematic methodologies for performing strength-weakness assessments are not well

developed in the strategic-management literature, but it is clear that strate- gists must identify and
evaluate internal strengths and weaknesses in order to effec- tively formulate and choose among
alternative strategies. The EFE Matrix, Competitive Profile Matrix, IFE Matrix, and clear statements of
vision and mission provide the basic information needed to successfully formulate competitive strate-
gies. The process of performing an internal audit represents an opportunity for man- agers and
employees throughout the organization to participate in determining the future of the firm.
Involvement in the process can energize and mobilize managers and employees.

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