Strategic management mission statement Essay
Strategic management mission statement
In order to achieve success, a majority of companies defines and follows a strategy. In order to do so, firms have at their disposal of lot of management tools. In this analysis, we will concentrate on one in particular, the mission statement. Kotler and Armstrong suggest that “A clear mission statement acts as an ‘invisible hand’ that guides people in the organization” (2010). Each company have to wonder about questions as Who we are?, Why we are here? What is our job?
The answers to these questions can appear obvious but they allow evaluating the firms’ actual position and giving a clear and coherent direction. After the determination of the missions, objectives and vision, the company will be able to concentrate on the types of strategy to adopt and on the operational priorities. However, the organisations must be vigilant not to establish their mission statements to do like the others or to establish it quickly.
They must also dissociate it from the other close concepts. Indeed, the statement “In writing mission statements, you are creating a brief description of what you want to focus on and what you want to accomplish…” asks to clarify the concept. In a premier step and using the previous wording, it will be interesting to understand and define this concept, then compare it with different points of view. In a second part, we will ask ourselves how establish a good mission statement, and why it is a compulsory step in a strategic management process.
Today, it is very easy to find a mission statement on companies’ websites or brochures. For this reason, we must determine the relevance and the usefulness of this tool. However, in a first step and by reading the statement given, we should define the mission statement and differentiate it to objective, visions and values. Indeed, the statement can be confused because it is possible to interpret it as a definition of an objective. We can read a lot of works in which the concept of the mission is not mentioned. The Strategor, for example, uses the concept of identity in the same sense that mission. We can keep in mind, the definition of Richard Lynch, “The mission of an organization outlines the broad direction that it should and will follow and briefly summarises the reasoning and values that lie behind it”, or in other words it is the reason to be here.
Moreover, in order to avoid confusion, we must understand that the objectives are a specific commitment more consistent than the mission over a specific time period. It may be quantified, market based, or environmental… We can find too, a vision, which is defined like an outline of what the organization wants to be in the future. Lastly, the final term to dissociate is value, a statement of principles and convictions divided within the organization. Clear values can become a foundation on which the mission is built. All of these interlinked concepts characterize the fundamental goals that the organization seeks.
Now, having the ability to understand this concept, it will be interesting to discuss role of the mission statement by comparing the points of view of different authors. According to a literature review, we will firstly highlight the disadvantages and secondly the advantages surrounding the mission statement. The main reason why firms don’t want to define a mission statement is due to large amount of time and effort it takes to produce. In fact, the definition of this statement requires a thorough analysis in which the manager must consider many components.
To be effective, the mission has to find the right balance on many parameters. Christopher Kenneth Bart and Mark C. Baetz spoke about the work of Ireland and Hitt (1992) who take up this same argument (too much effort and work) and add six other reasons justifying of the useless of mission statement: Impractical, which means it is too generic and thus fails to give guidance in making decisions and trade-offs. For example, the following mission statement describes a company’s competitive advantage rather than mission. “Our edge is a combination of our deep knowledge of the people and companies in the IT industry and the relationships we form with clients and candidates” (Charles N. Toftoy and Joydeep Chatterjee, 2004) Academic exercise and state the obvious
Don’t need it, because some companies succeed without one, O’Gorman et Doran (1999) affirm it too (from the work of Green, Kenneth W., Jr. Medlin, Bobby, 2003). Pfeffer and Salancik (2003) take the example of the American army and the Mafia Italian which collaborated during the Second World War without agreement on their respective mission. Would reveal too much confidential information
The firm can have a lack of general skill to develop it, therefore it can be too fanciful or unrealistic The top manager has other preoccupations with operational matters. Other cases are explained, in a journal of Andrew Campbell (1989), where the mission statement is not available. The first one speaks about the team. In fact, “when the top team is unlikely to be stable there is little point in discussing mission until the top team has changed.” The other one is when strategy is changing or highly uncertain and the third cases is when there are strong differences between members of the top team.
Finally, we can find an interesting idea explained by Klemm and al. (1991) that is not possible for a diversified conglomerate or holding company because it is not possible to define a mission statement with such a range of activities. Now, to confront all off these point of views, we must identify and discuss the advantages that deliver the mission statement.
To start we can take the story about a founder of the firm Heuristic Solutions, studied by Toftoy Charles N. and Joydeep Chatterjee (2004): “The process of developing a mission statement helped us define who we are and our true value to our customers and employees. When faced with difficult decisions, our mission statement has clarified how to proceed by reminding us of our values and the purpose of our company”
From this sentence, we can identify lot of positive aspects about mission statement. Christopher K. Bart & Mark C. Baetz stat the study of the council Bain & Company based at Boston in 1994. They did a work on 500 firms to evaluate the use of the 25 better management tools. And they conclude that the mission statement is the first one. We can read lot of articles which analyse the content of mission statement, in “Corporate Strategy: Mission Statements Make Cents”, Charles A. Rarick and John Vitton (1995) explain that there is a link with the firm’s financial performance. It can be the solution to have a better resource allocation
The mission statement can help the employee carry out his higher needs for membership, regard and self-realization initiated by Maslow (1954). A convergence between the mission of the organization where he works and his own nature can give to the employee the feeling to be carried out, be accepted, liked and recognized by the organization. In other term, there is a better staff motivation to achieve the common goal. “The mission statement outlines the broad directions that the organisation will follow, then the role of the mission statement is to communicate to all the stakeholders inside and outside the organisation what the company stands for and where it is headed” as developed Richard Lynch (2009). It can be underlined because this role of communication allows considering the stakeholders and differentiating the company from its competitors too.
The last advantage identified is while seeking to define it, the organization is brought to solve the divergent views. For example, the member of the same team can thought to be agree whereas by asking itself on “what is our job?” they can be in fundamental disagreement. We can example it, with a online lesson of strategic management “Negotiation, compromise, and eventual agreement on important issues are needed before focusing on more specific strategy formulation activities”
After outlining these various points of view, it is time to take a global perspective in order to synthesize and take a stand. When we look at arguments against mission statements, we understand that they are more contextual. Indeed, some exceptional cases show that the mission statements are not adapted but in general, as demonstrates the serious analysis of Christopher Kenneth Bart and Mark C. Baetz (1998), we can find a link between this work and the performance of the company. That’s why, it is important to note that mission statements is a reliable tool in the only condition that it is defined with serious. So it underlines a good question: how does one establish a mission statement sufficiently reliable to build our strategy? The subject of the second part states some basic principles to define with success the organization’s mission statement. Then, on the basis of this strong foundation, we will demonstrate how the strategic management process results from this.
We know that the mission statement is often judged negatively because of the simple and good reason that was badly defined. To avoid that, it is advisable, consequently, to give careful thought to the subject. We will address this in three parts.
The first important point is the signification. We must verify if all of the stakeholders can understand the signification of the mission statement. That’s why it is necessary to a clear and simple use of language. Some firms use specific business-words like jargon, maybe to impress, or in order to seem more professional. In this same idea, we can note a remark of an article “too much detail in a mission statement can alienate the manager and stifle creativity” (David and David, 2003). In fact, lot of authors, like Bart and Bartz (1998), are agreeing to say that they must be brief because it is easier to remember it and to understand it. However, I prefer moderate this point of view because by reading the mission statement of Walt Disney, « To make people happy », we can see that the brevity is not always efficient. In fact, it is not really clear and they don’t provide information about what do the firm. The second criterion that the mission statements must content is the acceptability. If they are imposed by the management, the mission statements will be not accepted and not efficient.
Therefore, the interns staff must be agree and believe in the statement. We understand that a relation of confidence takes hold. So, it is a participative style of management which is used when we follow this definition because it involves the senior management and the whole of employees. Lastly, a firm must be able to evaluate the results of the mission statement. We pay attention to the success of the realization and the relevance of the mission. It is measured by the quality of the execution. It reinforces the idea that the mission statement should not be too vague, otherwise we can’t evaluate and know the success. Sawhill and Williamson (2001) offer three indicators of performance: the mobilization of resources, the efficient of the staff in the work, and the progress in the accomplishment.
At this part of the work, we can understand how and why we should build an efficient mission statement. Therefore, the last thing that we must tackle is the integration of mission statements in the management strategic process. Indeed, by working the mission statement out carefully, we build a strong foundation, a support of the strategic direction. We understand that lots of authors place the mission statement in the center of the strategy as Thompson and Martin (2005) demonstrate it. (Appendix 1) Moreover, they give a interesting definition of strategic management process: “it is the process by which organisations determine their purpose, objectives and desired levels of attainment; decide on actions for achieving these objectives in an appropriate time-scale, and frequently in a changing environment; implement the actions; and assess progress and results” But, we can notice that there are different process.
Indeed, we can start the thought by the work of Richard Lynch (5th edition, 2009) who breaks the process down in three core elements: strategic analysis, strategic development and strategy implementation. The mission statement takes place in the first one, with the analysis of environment, resources and other terms as we spoke about it previously (vision, objectives…). So when we analyzed who we are, mobilized our resources and analyzed our environment, we established the first part of the process. We can then, draw some the conclusion on our positioning and our strategy.
However, we can invoke the theory of Dessler (1942) which decomposes the process differently (Appendix 2). Indeed, he defines a first stage with a strategy planning; a second one with a strategy implementation and a last one with a strategy evaluation. Each stage groups different steps. In all, we can distinguish seven steps.
Our analysis is resting on two of them which integrate the mission. The first one is the moment where we define the business and its mission and at the third step we translate the mission in strategic goals. Between this, we must perform external and internal audits, and after this, formulate, implement the strategy and evaluate its performance. So, we can conclude that the first role of mission statements is to bring a direction in the strategic management process.
Mission statements will assist in making some decisions. But, if we consider the mission statement as a guideline, it will direct and inspire your decisions in all areas: including marketing. Indeed, when the marketing team fined new ideas for a promotional offer or other things, the mission statement will become the way to verify if they are matching with the fundamentals of the company. As, Porter and Monroe (1997) recommend it, these information suggesting that mission statements should be precise.
In conclusion, we can understand that by defining the mission statements and the objectives, the organization achieves easier strategy planning. Therefore, we can maintain the utility of this concept because it becomes a guideline to lead the organisation to the success. Admittedly, it required a significant effort on behalf of the manager. He will have to adopt a style of participative management, considering the opinion of all the stakeholders, maybe he will must confront himself with some divergence from points of view and finally he will have to take care that the mission statement are always in adequacy with the evolution of the company. However, we could see some advantages which demonstrate that all of these efforts will be profitable. In fact, lots of studies reveal the positive link between the establishment of mission statements and the performance of the organization.
Moreover, the employees will be more implied because they need to be motivated and consolidated by a clearly stated mission. So we can see a better management of human resources but the studies prove also a better strategic and financial management. Sometimes we can read differing points of view, but in most cases the statements haven’t been elaborated upon in a serious manner. A mission statement should be in all cases, to the point, believable, measurable and substantiated by evidence. The strategies that will achieve the objectives then follow from the mission.
These two areas define the whole strategic process and are therefore important in the development of strategic management. Indeed, through this study, we can see two important roles of mission statement, the most clear is the guideline of the organization and the other role, less highlighted, it became an operational tool for example marketing tool. But by knowing that a mission statement define the “raison d’être” of an organization and that a change in the business mission is a high risk decision, we can ask us how it is possible to plan a diversification or an integration without change the fundamental values of the company?
– BART C.K. and BAETZ M.C. (1998), The Relationship between Mission Statements and Firm Performance: an Exploratory Study, Journal of Management Studies
-CAMPBELL Andrew, (1989) Does your Organisation Need a Mission? Leadership & Organization Development Journal, Vol. 10 Iss: 3
– DAVID Forest R. and DAVID Fred R., (2003), It’s time to redraft your mission statement, Journal of Business Strategy, Vol. 24 Iss: 1
– DESSLER Gary (1942), Human Resource Management, Pearson Prentice Hall
-GREEN, Kenneth W., Jr and MEDLIN, Bobby (2003), Academy of Strategic Management Journal, The DreamCatchers Group.
-KLEMM and al. (1991), The relationship between mission statement and firm performance
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-LYNCH Richard (2009) Strategic Management (5th edition)
-PFEFFER J. and SALANCIK G.R. (2003), The External Control of Organizations, Stanford University press. -PORTER and MONROE (1997), Mission statement is a valuable marketing tool – RARICK Charles A. and VITTON John, 1995 Corporate Strategy: Mission Statements Make Cents, Journal of Business Strategy, Vol. 16 Iss: 1
– SAWHILL John and WILLIAMSON David (2001), Measuring what matters in nonprofits, The McKinsey Quarterly, n. 2.
-TOFTOY Charles N. and JOYDEEP Chatterjee (Autumn 2004), Mission statements and the small business – THOMPSON John L. and MARTIN Frank (2005), Strategic Management: Awareness and Change Other source:
-WEB, Lesson of strategic management online:
http://www.zainbooks.com/books/management/strategic-management_5_comprehensive-strategic-model.html Appendix 1
John L. Thompson and Frank Martin, Strategic Management: Awareness And Change
Dessler Gary (1942), Human Resource Management