Strategic Management

2.3 The Components of Mission Statement

Learning Objectives:

By the end of this lesson, students should be able to:

1.) Develop critical thinking skills by assessing how components of a mission statement
interrelate and contribute to an enterprise's strategic direction.

2.) Accurately identify and define key mission statement components, covering customers,
products, markets, technology, economic objectives, philosophy, self-concept, public image, and
employee concerns.

3.) Apply mission statement knowledge to real-world scenarios, emphasizing effective

communication of insights regarding the guiding role of mission statements in organizational
behavior and decision-making.

What is Mission Statement

According to David F. Harvey:

"A mission provides the basis of awareness of a sense of purpose, the competitive
environment, degree to which the firm's mission fits its capabilities and the opportunities
which the
government offers".
The mission statement outlines the activities conducted by the organization and communicates
them to the society. The values and beliefs held by the organization play an important role in
fulfilling the mission as it is built on the foundation set by the organizational values.
The mission statements provide an internal direction to the organization for its future. It is
necessary for the employees to have motivation and enthusiasm to achieve the goals of the
organization.”

Definition:

• Mission statement is a description of what an organization does – what its business is – and
why it does it.
• "A mission statement is a succinct and strategic proclamation that articulates an
organization's core purpose, guiding values, intended achievements, and distinctive
identity. It serves as a navigational beacon, conveying the organization's raison d'être
(reason for being or purpose), its envisioned positive influence, and its aspirations to
stakeholders, employees, and the broader community. Mission statements play a pivotal
role in establishing direction, fostering cohesion, and instilling a sense of purpose, thereby
shaping the organization's choices, endeavors, and strategic pursuits." Understanding the
tool:
Often called the “credo”, “philosophy”, “core values” or “our aspirations”, organization’s
mission is the statement that defines its core purpose or reason for being. [2] It tells who a
company is and
what it does. According to P. Drucker, often called the father of modern management, a mission
is the primary guidance in creating plans, strategies or making daily decisions. It is an important
communication tool that conveys information about organization’s products, services, targeted
customers, geographic markets, philosophies, values and plans for future growth to all of its
stakeholders. In other words, every major reason why company exists must be reflected in its
mission, so any employee, supplier, customer or community would understand the driving force
behind organization’s operations.

There are two types of mission statements:

Customer-oriented missions.

Customer-oriented missions define organization’s purpose in terms of meeting customer needs

or providing solutions for them. They provide more flexibility than product-oriented missions
and can be easily adapted to changing environment. For example, Nokia’s statement “connecting
people” is customer oriented. It does not focus on mobile phones or smartphones only. It
provides a solution to customer needs and could easily have worked 50 years ago and will
continue to work in the future. It also gives more strategic flexibility for the company. In Nokia’s
case, it may start providing VoIP software to allow calls to be made over the internet and its
mission would still be valid.

Product-oriented missions.

Product-oriented missions focus on what products or services to serve rather than what solutions
to provide for customers. These statements provide less flexibility for the company because most
products have short life cycle and offer limited market expansion. The company that defines its
business as “providing best health insurance products” may struggle to grow to other insurance
product categories.

Components of Mission Statements

• Mission statements can differ by content, length, format, specifications, etc. It is one of
the most noticeable parts of an organization. An ideal mission statement has the
following nine components; a mission statement is called a good statement if it is
consisting of all or maximum of these components.
1.) Customers:

Who are the firm’s customers?

A mission statement should indicate the customer’s that they are going to serves in mission
statement.
Customers refer to the individuals, organizations, or entities that an organization serves, provides
products or services to, and interacts with in the course of its business operations. In a mission
statement, addressing customers involves describing the target audience and highlighting the
organization's commitment to meeting their needs and providing value.
The first opponent of firm’s mission is the customer. The mission should declare who are the
customers of the company for whom the firm is operating. And to take care of them in its
operations.
2.) Products or Services:

What are the firm’s major products or services?

A mission statement should indicate the products or services the organization deals in.
Products or services refer to the tangible goods, intangible offerings, or solutions that an
organization provides to its customers. In a mission statement, this component outlines the main
products or services offered by the organization and may emphasize their unique features or
qualities that set them apart from competitors.
The mission of a business also focuses on the products/services of the firm. What are the major
products and whether they are according to the needs and wants of the target customers? Mission
statement should clearly identify the products.

3.) Target Market:

Where does the firm compete?

An organization should indicate the type of market it serves in a mission statement.

Markets refer to the geographic areas or specific segments in which an organization operates,
sells its products or services, and competes for business. In a mission statement, mentioning
markets indicates the scope of the organization's reach and its strategic focus on particular
regions or customer groups.
Another important component of the company’s mission is the target market. It should through
some light/identify the target market of the company. The target market of the company is the
geographical boundaries in which the company is or is willing to operate and deliver its
product/services.

4.) Technology:

Is the firm technologically current?

Technology refers to the tools, techniques, methods, and innovations that an organization
employs to create, develop, or deliver its products and services. In a mission statement,
discussing technology showcases the organization's commitment to staying technologically
current and leveraging advancements to drive its operations and offerings.
A mission statement should describe about the technology being implemented for achieving the
organizational goals. This helps the organization in acquiring better technology vendors.
An ideal mission statement also declares the technology of the company. What technology the
company is using and what are the methods of operation and process. Or in general, how the
flow of value chain is occurring in the company.

5.) Philosophy:

What are the basic beliefs, values, aspirations, and ethical priorities of the firm?
Philosophy encompasses the fundamental beliefs, values, principles, and guiding philosophies
that shape an organization's culture, decision-making, and interactions. In a mission statement,
articulating philosophy outlines the core ethical and value-based principles that drive the
organization's actions and behaviors.
An efficient mission statement should outline the values held by the organization. The values
may include bringing inspiration and innovation, adopting customer centric approach, creating
lasting solutions to poverty as well as hunger, and raising voice against social injustice, etc.

6.) Concern for Employees:

Are employees a valuable asset of the firm?

What is the firm's attitude/orientation towards employees?

A mission statement should indicate its policies regarding its employees so that they realize their
importance in the organization.
Concern for employees reflects an organization's commitment to creating a supportive,
respectful, and fulfilling work environment for its staff. In a mission statement, addressing
concern for employees showcases the organization's dedication to valuing and investing in its
workforce, promoting professional growth, and ensuring employee well-being.
It's important to note that these definitions can vary based on the specific context and industry of
the organization. Mission statements may choose to emphasize certain components more than
others, based on the organization's values and strategic priorities.

7.) Self-Concept:

What is the firm’s distinctive competence or major competitive advantage?

A mission statement should always define the competitive advantage of the organization.
Self-concept refers to an organization's perception of its own strengths, competencies, and unique
attributes that contribute to its success and distinguish it from competitors. In a mission
statement, self-concept highlights the organization's distinctive capabilities and strengths that
enable it to excel in its industry.

8.) Concern for Survival, Growth, and Profitability:

What is the firm's commitment towards economic objectives?

Concern for survival implies an organization's commitment to achieving and maintaining
financial stability, growth, and viability over the long term. In a mission statement, addressing
concern for
survival conveys the organization's dedication to sustainable success and responsible
management of resources.
For a commercial organization it is essential to mention its financial objectives in the mission
statement. This will allow the stakeholders to know the financial motives and strategies.

9.) Concern Public Images:

Is the firm responsive to social, community, and environmental cancers?

Concern for public image reflects an organization's commitment to maintaining a positive
reputation, ethical conduct, and responsible corporate citizenship in the eyes of the public and
society at large. In a mission statement, addressing concern for public image indicates the
organization's dedication to being socially responsible, environmentally friendly, and
contributing positively to its community.
By formulating a mission statement, strategic leaders are able to convey the basic features and
functions of the organization which helps in creating a positive public image. It helps the
managers to guide the employees as per the approved public image.
Here are examples of each component of a mission statement tailored to the field of public
administration for a hypothetical government agency called "Community Development
Authority":

Customers:
The Community Development Authority is dedicated to serving our citizens, residents, and
community stakeholders by delivering essential public services, fostering sustainable
development, and ensuring a high quality of life for all.

Products or Services:
The Community Development Authority provides a range of vital services, including urban
planning, affordable housing initiatives, social welfare programs, and community engagement
efforts. Our comprehensive services address the diverse needs of our community, promoting
equitable growth and well-being.

Markets:
The Community Development Authority operates within the boundaries of our city and
collaborates regionally to enhance cross-jurisdictional cooperation. We are committed to
developing solutions that resonate with our local context while contributing to the broader
regional development goals.

Technology:
The Community Development Authority harnesses advanced technology, data analytics, and
digital platforms to enhance service delivery, optimize resource allocation, and engage the
community in meaningful ways that drive transparency and efficiency.

Concern for Survival:

The Community Development Authority is steadfast in our commitment to the long-term
prosperity of our community. We work diligently to ensure financial stability, prudent resource
management, and a sustainable trajectory that supports both current and future generations.
Philosophy:
At the Community Development Authority, our philosophy centers on accountability, inclusivity,
and empowerment. We believe in transparent governance, collaborative decision-making, and
empowering individuals and communities to actively participate in shaping their own future.

Self-Concept:
The Community Development Authority is recognized as a trusted partner in fostering
community well-being and development. Our strength lies in our ability to facilitate dialogue,
bridge diverse interests, and create synergies that lead to holistic and impactful solutions.

Concern for Public Image:

We hold ourselves to the highest standards of ethical conduct, responsible stewardship, and
social engagement. The Community Development Authority is deeply committed to enhancing
our public image by promoting transparency, accountability, and proactive communication.
Concern for Employees:
Our employees are the heart of our agency's success. The Community Development Authority is
dedicated to creating a supportive work environment that promotes professional growth, work-
life balance, and opportunities for continuous learning and development.

• Please note that these examples are for illustrative purposes and do not represent an
actual government agency. A mission statement in public administration should
reflect the specific goals, values, and priorities of the organization within the context
of public service and governance.

https://www.toppers4u.com/2021/01/mission-statement-characteristics.html

https://www.investopedia.com/terms/m/missionstatement.asp

https://strategicmanagementinsight.com/tools/mission-statement/

https://nectarhr.com/blog/missionstatement#:~:text=It%20captures%20your%20objectives%2C%
20helps,and%20consistent%20w ith%20your%20values.
FORMATIVE ASSESSMENT

1.) What is a mission statement according to David F. Harvey?

a) A detailed financial report

b) A navigational beacon for stakeholders

c) A list of employee responsibilities

d) A product-oriented goal

2.) Which of the following is NOT a component of an ideal mission statement?

a) Target Market

b) Employee Salaries

c) Technology

d) Concern for Public Image

3.) What does the term "Self-Concept" in a mission statement refer to?

a) The organization's perception of its strengths and uniqueness

b) Employee self-esteem

c) The company's financial standing

d) The products or services offered

4.) In a customer-oriented mission statement, what is the primary focus?

a) Employee satisfaction

b) Meeting customer needs

c) Maximizing profits

d) Technological advancements

5.) Why is it important for a mission statement to address Concern for Employees?

a) To attract more customers

b) To highlight the company's competitive advantage

 c) To showcase the organization's commitment to employee well-being

d) To increase market share

6.) Which of the following is an example of a product-oriented mission statement?

a) "Connecting People"

b) "Providing Best Health Insurance Products"

c) "Fostering Sustainable Development"

d) "Creating Lasting Solutions to Poverty"

7.) What does Concern for Survival, Growth, and Profitability in a mission statement imply?

a) A commitment to achieving and maintaining financial stability

b) A focus on employee development

c) A dedication to technological advancements

d) A commitment to environmental sustainability

8.) According to Peter Drucker, what is the role of a mission in an organization?

a) To list daily tasks

b) To create plans and strategies

c) To focus only on profitability

d) To minimize employee motivation

9.) Which component of a mission statement outlines the main products or services offered

by the organization?

a) Target Market

b) Products or Services

c) Technology

d) Philosophy
10.) Why is it important for a mission statement to address Concern for Public Image?

a) To increase employee salaries

b) To attract more customers

c) To maintain a positive reputation and ethical conduct

d) To decrease technological advancements

ANSWERS:

1.) B. A navigational beacon for stakeholders

2.) B. Employee Salaries

3.) A. The organization's perception of its strengths and uniqueness

4.) B. Meeting customer needs

5.) C. To showcase the organization's commitment to employee well-being

6.) B. "Providing Best Health Insurance Products"

7.) A. A commitment to achieving and maintaining financial stability

8.) B. To create plans and strategies

9.) B. Products or Services

10.) C. To maintain a positive reputation and ethical conduct