Strategic Management Concepts and

Cases 1st Edition Ali Solutions Manual

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Strategic Management Concepts and Cases 1st Edition Ali Solutions Manual

Chapter 2: The Business Vision and Mission

CHAPTER 2

THE BUSINESS VISION AND MISSION

CHAPTER OUTLINE

I. What Do We Want to Become?

II. What is Our Business?
III. Importance (Benefits) of Vision and Mission Statements
IV. Characteristics of a Mission Statement
V. Mission Statement Components
VI. Writing and Evaluating Mission Statements
VII. Conclusion

CHAPTER OBJECTIVES

After studying this chapter, you should be able to do the following:

1. Describe the nature and role of vision and mission statements in

strategic management.
2. Discuss why the process of developing a mission statement is as
important as the resulting document.
3. Identify the components of mission statements.
4. Discuss how clear vision and mission statements can benefit other
strategic-management activities.
5. Evaluate mission statements of different organizations.
6. Write good vision and mission statements.

CHAPTER OVERVIEW

Chapter 2 focuses on the concepts and tools needed to evaluate and write
business mission statements. A practical framework for developing mission
statements is provided. Actual mission statements of large and small
organizations and profit and nonprofit enterprises are presented and critically
examined. The process of creating vision and mission statements is
discussed.

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 Chapter 2: The Business Vision and Mission

EXTENDED CHAPTER OUTLINE WITH TEACHING TIPS

I. WHAT DO WE WANT TO BECOME?

A. Importance of a Vision Statement

1. A vision statement should answer the basic question, “What

do we want to become?” A clear vision provides the
foundation for developing a comprehensive mission
statement.

2. Many organizations have both a vision and a mission

statement, but the vision statement should be established
first and foremost.

a. The vision statement should be short, preferably one

sentence, and as many managers as possible should have
input into developing the statement.

b. Table 2-1 provides examples of several vision statements.

II. WHAT IS OUR BUSINESS?

A. Mission Statements

1. Drucker says asking the question, “What is our business?” is

synonymous with asking the question, “What is our mission?”

a. An enduring statement of purpose that distinguishes one

organization from other similar enterprises, the mission
statement is a declaration of an organization’s “reason for
being (raison d’être).”

b. Sometimes called a creed statement, a statement of

purpose, a statement of philosophy, a statement of
beliefs, a statement of business principles, or a statement
“defining our business,” a mission statement reveals what
an organization wants to be and whom it wants to serve.

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Chapter 2: The Business Vision and Mission

c. See Figure 2-1 – A Comprehensive Strategic Management

Model. It shows developing mission and vision as the first
step in strategic management.

B. Vision versus Mission

1. Many organizations develop both a mission statement and a

vision statement. Whereas the mission statement answers
the question, “What is our business?” the vision statement
answers the question, “What do we want to become?”

2. Several examples are given in the textbook.

C. The Process of Developing a Vision and Mission Statement

1. As indicated in the strategic-management model, a clear

mission statement is needed before alternative strategies can
be formulated and implemented.

2. It is important to involve as many managers as possible in

the process of developing a mission statement, because
through involvement, people become committed to an
organization.

3. A widely used approach to developing a mission statement is

to:

a. Select several articles about mission statements and ask

all managers to read these as background information.

b. Ask managers to prepare a mission statement for the

organization.

c. A facilitator, or committee of top managers, should then

merge these statements into a single document and
distribute this draft to all managers.

d. A request for modifications, additions, and deletions is

needed next along with a meeting to revise the document.

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 Chapter 2: The Business Vision and Mission

VTN (Visit the Net):

The website www.csuchico.edu/mgmt/strategy/module1/sld009.htm gives
questions that help to develop mission and vision statements.

Teaching Tip: An excellent book on mission statements is entitled, The

Mission Statement Book: 301 Corporate Mission Statements from America’s
Top Companies. The book is written by Jeffrey Abrahams and is an excellent
resource for individuals interested in knowing more about the purpose and
value of corporate mission statements.

III. IMPORTANCE OF VISION AND MISSION STATEMENTS

A. The Importance of Mission Statements is Well Documented

Rarick and Vitton found that firms with a formalized mission

statement have twice the average return on shareholders’ equity
than those firms without a formalized mission statement. Bart
and Baetz found a positive relationship between mission
statements and organizational performance. Business Week
reports that firms using mission statement have a 30 percent
higher return on financial measures than those without such
statements.

B. Reasons for Developing a Written Mission Statement

1. To ensure unanimity of purpose within the organization

2. To provide a basis, or standard, for allocating organizational

resources

3. To establish a general tone or organizational climate

4. To serve as a focal point for individuals to identify with the

organization’s purpose and direction, and to deter those who
cannot from participating further in the organization’s
activities

5. To facilitate the translation of objectives into a work structure

involving the assignment of tasks to responsible elements
within the organization

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Chapter 2: The Business Vision and Mission

6. To specify organizational purposes and the translation of

these purposes into objectives in such a way that cost, time,
and performance parameters can be assessed and controlled.

VTN (Visit the Net):

A great article on writing a meaningful mission statement is available at
http://sbinformation.about.com/cs/businessplans/a/mission.htm mission and
vision statements.

C. A Resolution of Divergent Views

1. Developing a comprehensive mission statement is important

because divergent views among managers can be revealed
and resolved through this process.

2. Considerable disagreement among an organization’s

strategists over vision and mission can cause trouble if not
resolved.

3. An organization that fails to develop a vision statement as

well as a comprehensive and inspiring mission statement
loses the opportunity to present itself favorably to existing
and potential stakeholders.

Natural Environment Perspective: Is Your Firm Environmentally

Proactive?
This box describes the differences between proactive and reactive
environmental policies and gives the reasons for having a proactive policy.

IV. CHARACTERISTICS OF A MISSION STATEMENT

A. A Declaration of Attitude

1. A mission statement is a declaration of attitude and outlook

more than a statement of specific details. It is usually broad
in scope for at least two reasons:

a. First, a good mission statement allows for the generation

and consideration of a range of feasible alternative

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 Chapter 2: The Business Vision and Mission

objectives and strategies without unduly stifling

management creativity.

b. Second, a mission statement needs to be broad to

effectively reconcile differences among and appeal to an
organization’s diverse stakeholders, the individuals and
groups of persons who have a special stake or claim on
the company.

2. An effective mission statement arouses positive feelings and

emotions about an organization; it is inspiring in the sense
that it motivates readers to action.

3. It should be short – less than 250 words.

B. A Customer Orientation

1. A good mission statement reflects the anticipation of

customers. Rather than developing a product and then trying
to find a market, the operating philosophy of organizations
should be to identify customers’ needs and then to provide a
product or service to fulfill those needs.

2. According to Vern McGinnis, mission statements should 1)

define what the organization is and what it aspires to be, 2)
be limited enough to exclude some ventures and broad
enough to allow for creative growth, 3) distinguish a given
organization from all others, 4) serve as a framework for
evaluating both current and prospective activities, and 5) be
stated in terms sufficiently clear to be widely understood
throughout the organization.

3. Good mission statements identify the utility of a firm’s

products to its customers.

C. A Declaration of Social Policy

1. The words social policy embrace managerial philosophy and

thinking at the highest levels of an organization. For this
reason, social policy affects the development of a business
mission statement.

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Chapter 2: The Business Vision and Mission

2. Despite differences in approach, more and more Arab-based

companies are trying to assure outsiders that they conduct
business in socially responsible ways. The mission statement
is an effective instrument for conveying this message.

3. Table 2-2 identifies characteristics of mission statements.

Global Perspective: Social Policies on Retirement, Japan Versus the World.

This box highlights the challenge that many countries face as their
population ages. Some countries like Germany encourage immigration to
bolster their workforces, but Japan has offered incentives for its elderly to
work until a later age.

Teaching Tip: Your students may find it interesting to know that not only
corporations find mission statement useful. Steven Covey, the author of the
highly successful book, The Seven Habits of Highly Successful People, has
written two books that explain how individuals and families can use mission
statements to help them determine who they are and what they want to
accomplish. The first book, How to Develop and Use a Personal Mission
Statement, explains why individuals should write mission statements to
provide a sense of direction and purpose for their lives. The second book,
How to Develop a Family Mission Statement, applies the same principles in a
family concept. Laurie Beth Jones advances a similar set of ideas in her
popular book, The Path: Creating Your Mission Statement for Work and for
Life.

V. MISSION STATEMENT COMPONENTS

A. Components and Questions That a Mission Statement Should

Answer

1. Customers: Who are the firm’s customers?

2. Products or services: What are the firm’s major products?

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?

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 Chapter 2: The Business Vision and Mission

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?

Teaching Tip: If you are interested in obtaining the mission statement for a
particular company, a good place to look is the company’s website or its
annual report. Annual reports can be obtained directly from a company or
through a service that disseminates annual reports. An example of the latter
is The Public Register’s Annual Report Service at www.prars.com. This
service provides free access to the annual reports of over 3,600 public
companies.

VI. WRITING AND EVALUATING MISSION STATEMENTS

A. Perhaps the best way to develop a skill for writing and evaluating
mission statements is to study actual company missions.

Mission statements of companies are not identical, but are actually

customized, crystallized, cameos of the essential character and mission of
each company. Thus, they are unique, concise, and concentrated with
several conceptual components.

Table 2-3 presents a variety of Mission Statements as examples. Two of

them are reproduced below—one pithy, and the other more detailed and
comprehensive.

Etisalat
To extend people’s reach. At Etisalat, we are actively developing advanced
networks that will enable people to develop, to learn and to grow. (Authors’
comment: the statement addresses one component: technology.)
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Chapter 2: The Business Vision and Mission

Isam K. Kabbani Group

To provide our part of the Arab world (3) with local and reliable services in a
variety of sectors and products (2).To create employment to thousands of
personnel and in-house training for hundreds of young (9) Arab graduates in
crucial sectors to the benefit of the IKK Group (5), the graduates themselves
and their own communities (8). To set a good example of our basic business
philosophy: “Hire well, train well, pay well and treat well.”(6). (Authors’
comment: the statement addresses six components: markets, technology,
concern for survival, growth, and profitability, philosophy, concern for public
image, and concern for employees.)

B. Examples of the essential components of mission statements

provided in Table 2-4.

VTN (Visit the Net):

The website http://www.nonprofits.org/npofaq/03/21.html provides mission
statement information on nonprofit firms.

Teaching Tip: Along with vision statements and mission statements, some
organizations articulate corporate “values” statements, which describe the
underlying principles that determine everything the organization does and
stands for.

 Johnson&Johnson:
www.jnj.com/community/health_safety/policies/vision.htm
 Samsung:
www.samsung.com/us/aboutsamsung/samsunggroup/valuesphilosoph
y/SAMSUNGGroup_ValuesPhilosophy.html

Teaching Tip: You are invited to visit the text’s website at

www.pearsoned.co,uk/awe/david for this chapter’s web exercises.

VII. CONCLUSION

A. Every organization has a unique purpose and reason for being,

and this uniqueness should be reflected in vision and mission
statements.

B. An organization achieves a heightened sense of purpose when

strategists, managers, and employees develop and communicate
a clear business vision and mission.
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 Chapter 2: The Business Vision and Mission

C. 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.

D. Well-designed vision and mission statements are essential for

formulating, implementing, and evaluating strategy.

E. They being essential tools for strategies, vision and mission

statements should be subject to revision, but would require
infrequent major changes if carefully crafted.

ISSUES FOR REVIEW AND DISCUSSION

1. Compare and contrast vision statements with mission

statements in terms of composition and importance.

Answer: Many organizations develop both a mission statement and a

vision statement. Whereas the mission statement answers the question,
“What is our business?” the vision statement answers the question, “What
do we want to become?” Both statements are essential for success of the
firm.

2. Do small local stores need to have written vision and mission

statements? Why or why not?

Answer: Less formality and detail characterize strategic management in

small businesses such as local stores. However, local stores are not
immune to competitive pressures, changes in technology, changes in
demographic factors, and resistance to change. Therefore, it is
recommended that even the smallest organization develop a written
mission statement. Such a formal statement indicates vision and good
management, which could enhance a small business's efforts to secure
bank financing and to develop good supplier, customer, and employee
relationships.

3. Why do you think organizations that have a comprehensive

mission statement tend to be high performers? Does having a
comprehensive mission cause high performance?

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Chapter 2: The Business Vision and Mission

Answer: Having a comprehensive mission statement does not guarantee

or cause high performance. However, a comprehensive mission statement
can contribute significantly to high performance. As described in the
chapter, a comprehensive mission statement provides numerous benefits
that usually translate into high performance (see Q. 14 below).

4. Explain why a mission statement should not include strategies

and objectives.

Answer: A mission statement should not include strategies and objectives

because the statement needs to be broad in scope to effectively provide a
basis for performing an external and internal audit and for generating and
selecting among alternative strategies. Including specific strategies and
objectives in a mission statement could reduce—and even stifle—the level
of innovative and creative thinking in an organization. Also, including
specific strategies and objectives in a mission statement jeopardizes the
potential for the statement to be widely accepted by all managers and
employees of the organization. Acceptance of a clear mission is a
prerequisite for gaining acceptance for strategies and objectives of the
organization.

5. What is your college or university’s self-concept? How would

you state that in a mission statement?

Answer: These answers will vary by institution. See the examples in the
chapter.

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

Answer: Many organizations develop both a mission statement and a

vision statement. Whereas the mission statement answers the question,
“What is our business?” the vision statement answers the question, “What
do we want to become?” Both the vision statement and the mission
statement ensure unanimity of purpose within the organization and make
important statements about “who the firm is” and “what it wants to
become” to outside stakeholders.

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

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 Chapter 2: The Business Vision and Mission

Answer: A mission statement needs to be reconciliatory because the claims

of a firm's various stakeholders often conflict. An effective mission statement
reconciles major differences among key stakeholders.

8. In your opinion, what are the three most important components

to be included in writing a mission statement? Why?

Answer: All of the evaluative criteria described in Chapter 2 are

important, but three are particularly important: customers, products or
services, and markets.

9. How would the mission statement of a for-profit and a

nonprofit organization differ?

Answer: The mission statements of profit versus nonprofit organizations

would not differ in format, except for the survival, growth, and
profitability component.

10. Write a vision and mission statement for an organization of

your choice.

Answer: This is a worthwhile classroom activity.

11. Conduct a search on the Internet with the keywords vision

statement and mission statement. Find various companies’ vision
and mission statements, and evaluate the documents. Write a
one-page, single-spaced report on your findings.

Answer: This is a worthwhile activity for students to perform as a

homework assignment followed by class discussion of the assortment of
statements identified.

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

Answer: The major stakeholders of a bank include commercial customers,

consumer customers, shareholders, communities, managers, and
employees. Each stakeholder group relies upon the organization.
Customers expect the bank to perform in a manner that protects them
financially. Shareholders expect the firm to be profitable. Local

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Chapter 2: The Business Vision and Mission

communities rely upon the bank to provide jobs and pay taxes.
Employees rely upon the bank for their income.

13. How could a strategist’s attitude toward social responsibility

affect a firm’s strategy? What is your attitude toward social
responsibility?

Answer: Firms must seek to address the concerns of many stakeholder

groups. Social policies ultimately affect the environment directly and
indirectly. The beliefs of the primary strategists in the organization will
absolutely affect how social policy is addressed in the organization’s
mission statement and strategies. Some strategists believe that
organizations have tremendous social obligations. Others believe that
organizations have no obligation to do any more for society than is legally
required. Most strategists agree that the first social responsibility of any
business must be to make enough profit to cover the costs of the future,
because if this is not achieved, no other social responsibility can be met.
Strategists should examine social problems in terms of potential costs and
benefits to the firm, and they should address social issues that could
benefit the firm most. As a responsible member of society, my attitude
toward social responsibility is that I must contribute in a beneficial
manner to society, practice good business ethics, obey the law, and be
ready to respect and serve others.

14. List the seven characteristics of a mission statement.

Answer: A mission statement has the following characteristics: 1) It is

broad enough to allow for the generation and consideration of a range of
feasible alternative objectives and strategies without stifling
management; 2) it can reconcile differences among, and appeal to, an
organization’s diverse stakeholders; 3) it is less than 250 words; 4) it
arouses positive feelings and emotions about the organization; 5) it
should be enduring; 6) it generates a favorable impression of the firm;
and, 7) it is useful for judging opportunities and strategies.

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

Answer: Eight benefits of having a clear mission statement are:

(1) Firms with a formalized mission statement have been known to
have twice the average return on shareholders’ equity than those
firms without a formalized mission;

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Strategic Management Concepts and Cases 1st Edition Ali Solutions Manual

Chapter 2: The Business Vision and Mission

(2) There is a positive relationship between mission statements and

organizational performance;
(3) Organizational purposes can be translated into actionable
objectives in such a way that cost, time, and performance
parameters can be assessed and controlled;
(4) It promotes a unanimity of purpose within the organization;
(5) It provides a basis or standard for allocating organizational
resources;
(6) A positive tone pervades the organizational environment with a
clear mission statement;
(7) It serves as a focal point for individuals to identify with the
organization’s purpose and direction, and to deter those who
cannot, from participating further in the organization’s activities;
(8) To facilitate the translation of objectives into a work structure
involving the assignment of tasks to responsible elements within
the organization.

16. How often do you feel a firm’s vision and mission statement
should be changed?

Answer: This depends on the individual firm. Vision and mission

statements should be evaluated on a regular basis to determine if they
are still appropriate. Firms may wish to change the statements in times of
crisis and in times of success. Ultimately the vision and mission should be
in tune with the company and its environment.

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