Strategic Management business vision essay
In the modern economic environment, companies need to put a lot of effort in staying competitive. For surviving and prospering, companies need to engage in strategic planning, and the first step of such planning is the development of effective mission and vision statements (The strategic planning process, 2007). The purpose of this paper is to analyze the essence and impact of mission and vision statements, develop five criteria for evaluating mission statements, five criteria for evaluating vision statements, and compare these criteria.
- Mission and vision statements
Generally speaking, the purpose of strategic planning is to identify where the company wants to be in the future, and in what way it is planning to get there (McNamara, 2009b). To build a consistent strategy, the business should possess certain core ideas shaping its strategic decision-making; these ideas are expressed in company mission and vision statements (The business vision and company mission statement, 2007).
Vision statement outlines what the organization wants to become (Heathfield, 2009). The purpose of the vision statement is to shape the future of the organization, engage and motivate employees, and to outline direction of the organization. Mission statement explains the purpose of the organization (McNamara, 2009a), and in the first approximation it should answer the question “What is our business?”.
It has been determined that companies with clearly identified mission and goals, where the employees have a clear understanding of vision, mission and goals, have average returns by 29% greater compared to other companies (Heathfield, 2009). Therefore, for a company to be successful, vision and mission statements should be clearly written and effectively communicated to the personnel.
- Criteria for evaluating vision statements
In my opinion, the following five criteria should be the core for evaluating vision statements. Vision statement should:
1) contain a clear answer to the question “What do we want to become in the future?”;
2) describe the situation when the company reached its strategic objectives (i.e. best future);
3) show how the company will be different from the others (its “niche” and features);
4) inspire and motivate employees;
5) be reasonably short and easy to remember.
Three first criteria were developed using the definition of the vision statement and its characteristics. Criterion 1 is derived from the very essence of vision statement – vision should outline, what the organization wants to become. Criterion 2 is based on the fact that vision statement originally was a “compelling description of the state and function of the organization once it had implemented the strategic plan” (McNamara, 2009a). The choice of Criterion 3 was conditioned by the need to avoid general words and focus on specific organizational role and objectives in mission and vision statements (Welch & Welch, 2008).
Criteria 4 and 5 were derived from the functions of vision statement: motivate employees and align their activities with organizational objectives. Criterion 4 relates to modern use of vision statement as a motivational factor, and criterion 5 was added because in optimal situation employees should know the company’s vision by heart.
- Criteria for evaluating mission statements
For evaluation of mission statements, it is possible to develop the following criteria. A mission statement should:
1) provide a clear answer to the question “What is the company’s business?”;
2) clearly explain the reasons why the organization exists;
3) show how the company is unique / different from all other companies;
4) create positive emotions and feelings, and motivate to action;
5) serve as a framework for evaluation of current activities.
First criterion was also developed basing on the definition of mission statement. Second criterion was formulated basing on the requirements to mission statements formulated by different authors: effective mission statements should be clear, straight and understandable (Welch & Welch, 2008); mission should be stated clearly so that it could be understood by all people (David, 2011). Criteria 3 is similar to the appropriate criterion for vision statements: both vision and mission should show how the organization stands out at the market. Criteria 4 and 5 were formulated using the characteristics of effective mission statements outlined by David (2011).
- Comparison of criteria for mission and vision statements (0.5)
Criteria 1 and 3 for evaluating mission and vision statements are quite similar, with differences arising due to the differences in the nature of vision and mission statements. Criterion 1 for both mission and vision statements was shaped by the definition of the appropriate statement, and criterion 3 is in fact the same criterion about organizational uniqueness, focused on the present time for mission statement and on the future for vision statement. Criteria 4 are also quite alike in both lists, because both statements are used as motivational ones. However, vision statement is more commonly used to motivate employees and other stakeholders, while mission statement shows the company’s aspirations and activities to the whole world.
Criteria 2 and 5 are significantly different for mission and vision statements, and also reflect the differences between vision and mission in general. The mission should explain the purpose of the organization (Criterion 2) and create a reasonable framework for decision-making (David, 2011), which is related to Criterion 5. Vision statement is directed into the future, so it should describe this visionary future (Criterion 2) and be easily memorizable, to be remembered by all stakeholders, and especially by employees (Criterion 5).
Conclusion
Both mission and vision statements are necessary elements of the company’s strategic planning: mission statement shows where the company is now and what are its purposes, and vision statement shows where the company is headed to. Five criteria for evaluating vision and mission statements were developed. Analysis of these lists of criteria for mission and vision statements showed that there were two similar criteria, one moderately common criterion and two different criteria. The presence of different criteria was determined by the different direction of mission and vision statements, and commonalities were determined by the similar position of these statements in organizational strategy.
