Crafting a Strategic Mission Statement for Growth

1. Chapter 2 Mission Statement Objective: defining the company mission statement

2. Strategic Planning as a Formula Getting customers = Company abilities – Competitors actions +/- Industry forces • The purpose of the strategic planning process is to grow profits and the business through more and better customers. • During the entire process of strategic planning, the focus will be on the customer and getting customers to do business with the company. • Therefore, the strategic plan will be based on the following premises;

3. Premise 1: understanding the customers, and having the capabilities to satisfy them. • Premise 2: understanding the industry forces at work, and can incorporate, adapt to, or counter them in order to be successful. • Premise 3: understanding the competitors and can position the company against them in a manner that the customer perceives as important, unique and superior.

4. Analysis To complete the strategic planning process, the following factors need to be analyzed; • The company mission, in terms of: • Goals and objectives, • Values and Competencies, • Strengths and weaknesses. • The business, in terms of: • Products and services offered, • Primary markets served

5. The customers, in terms of: • Needs, • Desired benefits, • Buying characteristics. • The make-up of the business, in terms of: • Strategic business units, • Focus. • The make-up of the industry, in terms of: • Forces, • Attractiveness, • Success factors. • The competitors, in terms of: • Pricing issues, • Service issues, • Quality issues, • Areas of differentiation.

6. The Mission Statement • The mission statement can be defined as a broad statement of characteristics (product and market), goals (profit and growth), and philosophies of a business; or simply its purpose and philosophies. It is an expression of the vision for the company. The statement lays a foundation for the future actions, and the major philosophies (values) that underlie those actions. • It is also referred to as the company mission, mission, vision, and creed or credo.

7. Importance of Mission Statements • Firms with mission statements generally outperform those without one. In a study of the Business Week 1000, firms with mission statements were seen that they had an average return on stockholder’s equity of 16,6%, while the return for those without mission statements was 9,7%. The figures indicate a 71,1% disparity between the two groups of firms.

8. Reasons for a Mission Statement • To help promote clarity of purpose throughout the company, • To function as a foundation point for major decisions, • To motivate management and employees of the firm; to gain commitment within the company, • To foster understanding and support outside the company (helps external public relations)

9. Components of the Mission Statement There are probably many ways to write a mission statement, however it should include at least the following: • A description of the company’s current business, • A description of the customers the company currently serves, • A description of the products and services the company offers, • A description of company goals – where do you want to go? • A description of company philosophy – what values and beliefs underlie the business practices? • A description of company public image – how the company wants to be perceived?

10. Central Issues in the Creation of a Mission Statement Peter Drucker stresses the importance of answering three questions during the process of preparing the firm’s mission: • What is our business? • What will our business be? • What should our business be?

11. What is our business? • This must be defined based on the customer’s perception: What are the key satisfactions (and values) derived from purchasing our product or service? Why do target customers purchase the company’s products or services? Customers buy the satisfaction of a need – the core benefit. The core benefit of a restaurant would be satisfaction of hunger?, Status? The actual product or value enhancing attributes would be quality, large plates of food, unique spices, fresh baked bread, a convenient location, a relaxing atmosphere, courteous service, fast or leisurely service, status or price.

12. What will our business be? • Although today’s product offering may be quite successful, it may not elicit the same prosperity next year, in the future. Will restaurants change their present menu mix, pricing, promotional and distribution strategies in the next three to five years? Will changes in the economy, personnel supply or characteristics, societal trends or technological changes have an effect on managerial decisions? What current or future needs of customers are not currently being met? Are there certain features that could be added to the business, such as delivery, internet reservations or advertising, upgraded product quality or services, less fat, more spices, or market penetration in nontraditional locations.

13. What should our business be? • Are there forecasted changes in the environment that should be incorporated into the business’s current operating philosophy? If there is perceived opportunity for rapid expansion, should the firm proceed? If 50% of customers say they want something that no competitor is currently offering but the service would require a major change in current operating logistics, should the service be considered?

14. Writing the Mission Statement To complete the mission statement, the company must do the following: • Assess its position by completing a SWOT analysis. This is an evaluation of the company’s strengths and weaknesses, the opportunities available, and the threats that can impact the company.

15. Review the company and identify the core values that it possess and deem important. • Identify both the quantitative and qualitative goals the company wants to achieve. • Review the examples of mission statements, and complete a mission statement for the company.

16. Task 1: SWOT Analysis • SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. • It helps to understand the environment in which the company operates. • It helps the company balance the internal strengths and weaknesses against the opportunities and threats it face. • It helps the company to identify its capabilities and the competitive advantages available to it.

17. Task 2: Assess Core Values • Core values (beliefs) represent the focus of the company. • They indicate what is important to the company and what the company hopes to convey as important to the key parties (stakeholders). • Core values can cover an almost infinite number of areas and topics. The following may give an idea: customer-focused values, integrity-based values, corporate citizen values, values based on quality service, people-oriented values, action-oriented values

18. Task 3: Statement of Goals • The goals are simply the things the company wants to accomplish. They can be quantitative or qualitative. • Quantitative goals are specific and measurable such as desired sales volume in 12 months/24 months/36 months, desired earnings growth rate per year, desired contribution or gross margin, desired profit after taxes.

19. Qualitative goals reflect non-financial desires of the company. They, like the core values, reflect a philosophy or strategy that is driving the efforts. The following are some examples for qualitative goals; providing employees a work environment that fosters innovation and pride in accomplishments, demonstrating and delivering honesty and integrity in all company transactions, being an active and contributing member of the community, focusing the company’s efforts constantly towards superior customer service.

20. Stakeholders • The mission statement is generally addressed to the stakeholders of the company – those people or groups that have the most to gain or lose based on the firm’s performance. • Internal stakeholders; executive officers, board of directors, stockholders, and employees are basically concerned with operating the company to yield the greatest reasonable profit, good pay and benefits, satisfactory working conditions, and a respectable image. External stakeholders; customers, suppliers, creditors, competitors, governments, local community, general public are primarily concerned that the company operate for the good of society.