ESTABLISHING

COMPANYS VISION,
MISSION AND
OBJECTIVES
Presented
By
Prof. Dr. M. Ekramul Hoque

Meaning of Vision

A vision is a mental image of a possible and desirable

future state of the organization.
A vision describes aspirations for the future - a
destination for the organization. We can say that a
vision is a dream a distant, long-term dream.
An organizations vision, which is often called
purpose of the organization, is designed to express
the fundamental reason for the organizations
existence.
Usually most organizations describe their vision or
purpose in one or two sentences in the form of a
statement called vision statement. Vision statement
is used to refer to an understanding of why the
organization exists.

Examples of Vision

Vision statement of the World Vision of

Bangladesh:
Working for a world that no longer tolerates
poverty.
Vision statement of Walt Disney Company:
To make people happy

Company Mission

The fundamental purpose that sets a firm apart from

other firms of its type and identifies the scope of its
operations in product and market terms is defined as the
company mission. The company mission is a broadly
framed but enduring statement of a firms intent.
It embodies the business philosophy of the firms
strategic decision makers, implies the image the firm
seeks to project, reflects the firms self-concept, and
indicates the firms principal product or service areas
and the primary customer needs the firm will attempt to
satisfy.

In short, it describe the firms product, market, and

technological areas of emphasis, and it does so in a
way that reflects the values and priorities of the firms
strategic decision makers.
Mission contains broadly outlined or implied
objectives and strategies rather than specific
directives. Characteristically, it is a statement, not of
measurable targets but of attitude, outlook, and
orientation.
An excellent example is the company mission
statement of Nicor, Inc., shown in strategy in Action.

Formulating a Mission

The process of defining the company mission for a

specific business can perhaps be best understood by
thinking about the business at its inception.
The typical business begins with the beliefs, desires,
and aspirations of a single entrepreneur.
Such an owner-mangers sense of mission usually is
based on the following fundamental beliefs:
The product or service of the business can provide
benefits at least equal to its price.
The product or service can satisfy a customer need of
specific market segments that is currently not being met
adequately.

The technology that is to be used in production will

provide a cost- and quality-competitive product or
service.
With hard work and the support of others, the business
can not only survive but also grow and be profitable.
The management philosophy of the business will
result in a favorable public image and will provide
financial and psychological rewards for those who are
willing to invest their labor and money in helping the
business to succeed.
The entrepreneurs self-concept of the business can be
communicated to and adopted by employees and
stockholders.

Ideal Contents of a Mission

Statement

There does not exist any hard and fast rule for formulating a
mission statement. An analysis of various mission statements
of different companies (especially business-oriented firms)
indicates that a mission statement needs to include some
common issues, such as:
the basic type of product or service to be offered, the primary
markets or customer groups to be served, and the technology
to be used in production or delivery;
the firms fundamental concern for survival through growth
and profitability;
the firms managerial philosophy;
the public image the firm seeks; and
the self concept of the firm.

Basic Product or Service; Primary

Market; Principal Technology

Three indispensable components of the mission statement

are:
specification of the basic product or service,
specification of the primary market, and
specification of the principal technology for production or
delivery.
For example, Dayton-Hudson Corporation is a diversified
retailing company whose business is to serve the American
consumer through the retailing to fashion-oriented quality
merchandise.

Company Goals: Survival,

Growth, Profitability

Three economic goals guide the strategic direction of

almost every business organization. Whether or not
the mission statement explicitly states these goals, it
reflects the firms intention to secure survival through
growth and profitability.
A firm that is unable to survive will be incapable of
satisfying the aims of any of its stakeholders. A firms
growth is tied inextricably to its survival and
profitability. In this context the meaning of growth
must be broadly defined.

Example: Growth in market share, in the number of

markets served, in the variety of products offered, and in
the technologies that are used to provide goods or
services.
Growth means change, and proactive change is essential
in a dynamic business environment.
Profitability is the mainstay goal of a business
organization. No matter how profit is measured or
defined, profit over the long term is the clearest
indication of a firms ability to satisfy the principal
claims and desires of employees and stockholders.
Example: to achieve sufficient profit to finance out
company growth and to provide the resources we need
to achieve our other corporate objectives.

Company Philosophy

The statement of companys philosophy, often called

the company creed, usually accompanies or appears
within the mission statement.
It reflects or specifies the basic beliefs, values,
aspirations, and philosophical priorities to which
strategic decision makers are committed in managing
the company.
It provides a distinctive and accurate picture of the
firms managerial outlook.

Public Image

Both present and potential customers attribute certain

qualities to particular businesses.
Gerber and Johnson & Johnson make safe product;
Cross pen makes high-quality writing instruments;
Corvettes are power machines.
Thus, mission statements should reflect the publics
expectations, since this makes achievement of the
firms goals more likely.

Company Self-Concept

A major determinant of a firms success is the extent

to which the firm can relate functionally to its
externally environment.
To achieve its proper place in a competitive situation,
the firm realistically must evaluate is competitive
strengths and weakness.
This idea that the firm must know itself is the
essence of the company self-concept.

Pearce and Davids eight basic

components

Target customers and markets (e.g., students,

engineers, doctors, nurses, patients)
Products or services (e.g., toothpaste, perfume,
computer)
Geographical domain (e.g., national level,
worldwide)
Technology (e.g., cellular communication
technology; information technology)

Concern for survival (e.g., to conduct business

prudently to provide profits and growth)
Philosophy (e.g., a spirit of sharing and caring where
people give cheerfully of their time, knowledge and
experience)
Companys self-concept (e.g., a diversified, multiindustry company) and
Concern for public image (e.g., to share the worlds
obligation for the protection of the environment).

Examples of Mission
Statements

Mission Statement of Hewlett-Packard Company

Hewlett Packard is a major designer and manufacturer
of electronic products and systems for measurement
and computation. Its basic business purpose is to
provide the competitive capabilities and services
needed to help customers worldwide improve their
personal and business effectiveness.
Mission Statement of Apple Computer
To bring the best personal computing products and
support to students, educators, designers, scientists,
engineers, business persons and consumers in over 140
countries around the world.

Can there be a Mission for

Functional Departments?

There can be separate mission statements for the

departments like Marketing, Finance, Human
Resources, Research and Development (R & D), etc.
For example, the mission of the Human Resources
Department can be to contribute to organizational
success by developing effective leaders, creating
high-performance teams, and maximizing the
potential of individuals.
The mission of the marketing department may be
providing excellent customer service all the time
round the year to exceed the customers expectations.

Can mission be changed?

In this world of continuous changes in the

environment, it is common to periodically redefine
the mission of companies.
Sometimes, the original mission formulated long ago
does not work due to some reasons it may become
unacceptable to the stakeholders.
In that case, mission should be modified or altogether
created anew.

Communicating the Mission

To enlist employee commitment, the mission needs to

be communicated to all employees.
People need to believe that the companys management
knows where it is trying to take the company.
Management should present the mission in language
that creates a vivid image in the employees heads and
provokes emotion.
For example, building a mosque or temple (mandir) or
church is more inspiring than laying foundation
stone.
The language of mission should be so succinct and
specific that it can pin down the organizations real
business arena.

Establishing Objectives

Mission statement provides an overall goal for the

organization but does not enable managers to go for
action. Managers therefore need to convert the
mission into specific performance objectives.
Objectives are basically targets the anticipated end
results of any endeavor.
An objective must clearly show what the company
wants to achieve and when it wants to achieve it.
An objective needs to be written in quantitative,
measurable and concrete terms.

A well-formulated objective must be SMART.

Here, S=Specific, M=Measurable, A=Achievable
(some view that A should stand for Appropriate
appropriate to resources, environment and
technology of the organization), R=Realistic, and
T=Time-bound.
Examples of SMART Objectives:
To increase the sales of all products of the
company by 5% during the year 2006.
To reduce overhead costs of the company by Tk.
100,000.00 during the next six months.

The examples cited are of operating objectives, used

by operational mangers and mid-level mangers for
implementing their plans with specific targets in
mind.
Top managers set broader objectives with longer time
horizons than do successively lower levels of
managers.
Lower level managers set objectives based on the
middle-level objectives.
In effect, lower-level objectives provide the means for
achieving middle-level objectives and, in turn,
middle-level objectives provide the means for
achieving top-level objectives.

Strategic and Financial Performance

Objectives

In strategic management, we are more concerned with

strategic performance objectives and financial
performance objectives.
Strategic performance objectives are concerned with
sustaining and improving companys long-term
market position and competitiveness.
On the other hand, financial performance objectives
are related to achieving financial gains for having a
strong financial standing.

Examples of Strategic Objectives

A longer market share

Higher product quality
Lower costs relative to key competitors
Superior customer service
Increased ability to compete in international markets

Examples of Financial Objectives

Faster revenue
Higher dividends
Stable earnings during recessionary periods
Higher returns on invested capital.
In addition to the above types of objectives, strategic
managers also need to be concerned with the longterm and annual objectives.

Long-Term Objectives

Long-term objectives are the end results that an organization

contemplates to achieve over a long period of time, usually
five-year period.
However, five-year period is absolutely arbitrary. An
organization that experiences a turbulent situation in the
industry may choose to consider a period less than five year
as long-term.
If, on the other hand, a company operates in a stable industry
where there is no or less environmental turbulence, a period
over five year may be the norm for long-term objective. So,
it is better to define long-term as a multiyear period.
Long-term objectives typically involve such issues as return
on investment, staff development, profitability and the like.

Annual Objectives

Annual objectives as the end results that an

organization seeks to achieve within a year.
For example, a company may set an annual objective
of achieving two (2%) percent growth in profitability.
Annual objectives are to be set in relation to the longterm objectives of the company. As an instance, the
marketing department can set the objective of
increasing sales volume at the rate of five (5%)
percent every year for the next five years.
This has been set keeping in view the companys
long-term objective of achieving twenty-five (25%)
percent growth in sales volume during the next five
years.