Strategic Importance of Mission Statements

Mission statement is the description of an organization’s reasons for existence, its fundamental purpose. It is the guiding principle that drives the processes of goal and action plan formulation, “a pervasive, although general, expression of the philosophical objectives of the enterprise.” Mission should focus on long-range economic potentials, attitudes toward customers, product and service quality, employee relations, and attitudes toward owners. It provides identity, continuity of purpose, and overall definition, and should convey the following categories of information.

1. Precisely why the organization exists, its purpose, in terms of (a) its basic product or service, (b) its primary markets, and (c) its major production technology.
2. The moral and ethical principles that will shape the philosophy and character of the organization.
3. The ethical climate within the organization.

Thus mission outlines the firm’s identity and provides a guide for shaping strategies at all organizational levels.

The role played by mission in guiding the organization is an important one. Specifically it

1. serves as a basis for consolidation around the organization’s purpose.
2. provides impetus to and guidelines for resource allocation.
3. defines the internal atmosphere of the organization, its climate.
4. serves as a set of guidelines for the assignment of job responsibilities.
5. facilitates the design of key variables for a control system.

The mission statement must be believable in that the company’s behavior should correspond to it over both the short and long term. In this way it can serve as the foundation for the development of respect for and pride in the firm by management, employees, owners, customers, suppliers, and others who interact with it.

Broad-based acceptance of the values represented by mission can lead to three characteristics of firms that accomplish this acceptance:

1. They stand for something–the way in which business is to be conducted is widely understood.
2. From the topmost levels of management down through the firm’s organization structure to the lowest level of production jobs, the values are accepted by all employees.
3. Employees feel special because of a sense of identity which distinguishes the firm from other firms.

Mission typically is not considered a part of a firm’s strategy set. It reflects the essential preferences of owners and managers for what the firm will do. Strategy will accomplish the task of reducing mission to operational terms. As such mission is somewhat a personal choice of a firm’s dominant group of actors and is an input to the strategy formulation process.