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.

“A mission statement is an enduring statement of purpose for an organization that identifies the scope of its operations in product and market terms, and reflects its values and priorities…..Every company no matter how big or small, needs a mission statement as a source of direction, a kind of compass, that lets its employees, its customer, and even its stockholders know what it stands for and where its headed.” – Abrahams, 1995.

From the above definition its clear that Mission statement is an enduring statement of a firm’s purpose, possibly highlighting the scope of operations, the market it seeks to serve, and the ways it will attempt to set itself apart from competitors. A mission statement guides the actions of people inside the firm and informs customers and other stakeholders of the company’s underlying reasons for existence. The mission statement should be widely publicized with employees, suppliers, partners, shareholders, customers, and the general public.

“A good mission statement captures an organization’s unique and enduring reason for being, and energizes stakeholders to pursue common goals. It also enables a focused allocation of organizational resources because it compels a firm to address some tough questions: What is our business? Why do we exist? What are we trying to accomplish?” – Bart, 1998.

Mission statement 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.

“Corporate mission statements…are the operational, ethical, and financial guiding lights of companies. They are not simply mottoes or slogans; they articulate the goals, dreams, behavior, culture, and strategies of companies.” – Stone, 1996.

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.

According to King & Cleland, a well-designed company mission must accomplish the following:

  1. Ensure unanimity of purpose within the organization.
  2. Provide a basis for using the organization’s resources.
  3. Establish a general tone or organizational climate.
  4. Serve as a focal point for those who can identify with the organization’s purpose and direction and weed out people who cannot do so.
  5. Facilitate the translation of objectives and goals into a work structure involving the assignment of tasks to responsible people within the organization.
  6. Specify the organizational purpose and the translation of this purpose into goals in such a way that cost, time and performance parameters can be assessed and controlled.

Developing a mission statement can be one of the most complex and difficult aspects of strategic planning. Completing these statements requires detailed considerations of a company’s values and vision. Effective mission statements indicate specific, achievable, inspiring principles. They avoid unrealistic promises and statements.

Mission statements of some famous companies are listed below:

  • We are a global family with a proud heritage passionately committed to providing personal mobility for people around the world. - Ford Motor Company
  • We fulfill dreams through the experience of motorcycling, by providing to motorcyclists and to the general public an expanding line of motorcycles and branded products and services in selected market segments. - Harley-Davidson, Inc
  • Operating a safe and secure government. – IBM
  • At Microsoft, we work to help people and businesses throughout the world realize their full potential. This is our mission. Everything we do reflects this mission and the values that make it possible. – Microsoft
  • To Bring Inspiration and innovation to every athlete in the world. – NIKE Inc
  • Our mission: to inspire and nurture the human spirit one person, one cup and one neighborhood at a time. – Starbucks
  • The mission of The Walt Disney Company is to be one of the world’s leading producers and providers of entertainment and information. Using our portfolio of brands to differentiate our content, services and consumer products, we seek to develop the most creative, innovative and profitable entertainment experiences and related products in the world. - The Walt Disney Company

Effective mission statements can be a great asset to an organization. When everyone is working together in a defined manner greater organizational purpose is achieved. A mission statement is a stepping stone in the strategic planning process.

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About Abey Francis

Abey Francis is the founder of MBAKnol - A Blog about Management Theories and Practices - and he's always happy to share his passion for innovative management practices. You can found him on Google+ and Facebook. If you’d like to reach him, send him an email to: [email protected]
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