“to discover, develop and deliver innovative medicines that help patients prevail over serious diseases.”
Source: Based on information at http://www.missionstatements.com/fortune_500_mission_statements.html. Courtesy of CVS Health; Courtesy Aflac; Courtesy Bristol-Myers Squibb Company.
exercise 2c
Write a Vision and mission Statement for the Hershey Company
Purpose
much like a person’s curriculum vita (resumé), there is always room for improvement with regard to an existing vision and mission statement. Hershey does not have a printed vision statement, but the company’s mission statement simply reads as follows: “Bringing sweet moments of Hershey happi- ness to the world every day.”
Instructions
Step 1 refer to the Cohesion Case (p. 27) after Chapter 1 .
Step 2 on a clean sheet of paper, write a one-sentence vision statement for Hershey.
Step 3 on that same sheet of paper, write a new and improved mission statement for Hershey that complies with (1) the nine components and (2) the nine characteristics presented in this chapter.
exercise 2D
Compare your College or university’s Vision and mission Statements to that of a leading rival institution
Purpose
most universities have a vision and a mission statement. the purpose of this exercise is to give you practice in comparing the effectiveness of a vision and a mission statement for a university with the statements from a competing university.
Instructions
Step 1 Determine whether your institution has a vision or a mission statement. look in the front of the college handbook. if your institution has a written statement, contact an appropriate administrator of the institution to inquire as to how and when the statement was prepared.
Share this information with the class. analyze your college’s vision and mission statements in light of the concepts presented in this chapter.
Step 2 Compare the vision statement and the mission statement of your college or university to those of a leading institution.
Step 3 Write a one-page analysis comparing the statements.
exercise 2e
Conduct mission Statement research
Purpose
this exercise gives you the opportunity to study the nature and role of vision and mission statements in strategic management.
Instructions
Step 1 Visit the websites of various organizations in your city or county to identify firms that have developed a formal vision or mission statement. include some websites of nonprofit organi- zations and government agencies in addition to small and large businesses.
Step 2 ask to speak with the director, owner, or chief executive officer of several organizations.
explain that you are studying vision and mission statements in class and are conducting research as part of a class activity.
Step 3 ask several executives the following four questions, and record their answers.
1. When did your organization first develop its vision or mission statement? Who was primarily responsible for its development?
2. How long have your current statements existed? When were they last modified? Why were they modified at that time?
3. By what process are your firm’s vision and mission statements altered?
4. How are your vision and mission statements used in the firm?
Step 4 Provide an overview of your findings to the class.
(note to Professors—See the Chapter im for an additional, excellent exercise for this chapter)
Current readings
Bartkus, Barbara, myron glassman, and r. Bruce mcafee.
“mission Statements: are they Smoke and mirrors?”
Business Horizons 43, no. 6 (november–December 2000): 23.
Binns, andy, et al. “the art of Strategic renewal.” MIT Sloan Management Review 55, no. 2 (2014): 21–23.
Birkinshaw, Julian, nicolai J. Foss, and Siegwart lindenberg.
“Combining Purpose with Profits.” MIT Sloan Management Review 55, no. 3 (2014): 49–56.
Braun, S., J. S. Wesche, D., Frey, S. Weisweller, &
C. Paus. “effectiveness of mission Statements in
mini-case on waLt Disney comPany (Dis)
WHat iS DiSney’S ViSion For tHe Future anD miSSion For tHe PreSent?
everyone loves mickey mouse and Donald Duck. Walt Disney’s two largest segments are media networks and Parks and recreation. media networks consists of aBC, eSPn, Disney films, newly acquired lucasfilm, and 35 radio stations, among others. Parks and recreation includes the Walt Disney theme parks in the united States, France, China, and Hong Kong, and the more recent Disney cruise line.
Disney operates three other divisions: Studio entertainment, Consumer Products, and interactive media.
Walt Disney’s actual vision statement is “to make people happy.” However, an improved, author- proposed vision statement for Disney is “to offer the best family entertainment in the world through theme parks, cruises, movies, and radio and television coverage of news and sporting events globally.”
Walt Disney’s actual mission statement is “to be one of the world’s leading producers and pro- viders 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 en- tertainment experiences and related products in the world.” However, an improved, author-proposed Disney mission statement is as follows:
We are on a mission every day to serve customers young and old with outstanding family enter- tainment. By offering popular theme parks and Disney tV programming to our newly acquired aBC, eSPn, and cruise lines, we provide well-diversified family entertainment worldwide. We use many Disney characters such as mickey mouse and Donald Duck to excite customers glob- ally. We produce apps for smartphones in the interactive media division. We give back gener- ously to our communities and offer many internships for deserving college students. everything we do at Disney is possible because of our great employees and fans worldwide.
Questions
1. in what three ways is the proposed vision statement better than Disney’s actual vision statement?
2. in what three ways is the proposed mission statement better than Disney’s actual mission statement?
3. How would you further improve the proposed new Disney vision and mission statements?
Source: Company documents and a variety of sources.
Source: Alliance/Fotolia
endnotes
1. Peter Drucker, Management: Tasks, Responsibilities, and Practices (new york: Harper & row, 1974), 61.
2. andrew Campbell and Sally yeung, “Creating a Sense of mission,” Long Range Planning 24, no. 4 (august 1991): 17.
3. W. r. King and D. i. Cleland, Strategic Planning and Policy (new york: Van nostrand reinhold, 1979), 124.
4. Brian Dumaine, “What the leaders of tomorrow See,”
Fortune (July 3, 1989), 50.
5. “How W. t. grant lost $175 million last year,” Business Week (February 25, 1975), 75.
6. Drucker, Management, 88.
7. John Pearce ii, “the Company mission as a Strategic tool,” Sloan Management Review 23, no. 3 (Spring 1982): 74.
8. george Steiner, Strategic Planning: What Every Manager Must Know (new york: the Free Press, 1979), 160.
9. David, meredith e., David, Forest r., and David, Fred r. “mission Statement theory and Practice: a Content analysis and new Direction,” international Journal of Business, marketing, and Decision Sciences, Vol. 7, no. 1, Summer 2014, 95-109.
10. http://ezinearticles.com/?elements-of-a-mission- Statement&id=3846671
organizations—a review.” Journal of Management &
Organization, 18 (2012): 430–444.
Canton, andrew m., Chad murphy, and Jonathan r. Clark.
“a (Blurry) Vision of the Future: How leader rhetoric about ultimate goals influences Performance.”
Academy of Management Journal, 57 (December 2014):
1,544–1,570.
Church mission Statements, http://www.missionstatements.
com/church_mission_statements.html
Collins, David J., and michael g. rukstad. “Can you Say What your Strategy is?” Harvard Business Review (april 2008):
82. Company mission Statements, http://www.mission- statements.com/company_mission_statements.html Conger, Jay a., and Douglas a. ready. “enabling Bold Visions.” MIT Sloan Management Review 49, no. 2 (Winter 2008): 70.
Craig, nick, and Scott Snook. “From Purpose to impact.”
Harvard Business Review 92, no. 5 (2014): 104–111.
David, meredith e., Forest r. David, and Fred r. David.
“mission Statement theory and Practice: a Content analysis and new Direction.” International Journal of Business, Marketing, and Decision Sciences 7, no. 1 (Summer 2014): 95–109.
Day, george S., and Paul Schoemaker. “Peripheral Vision:
Sensing and acting on Weak Signals.” Long Range Planning 37, no. 2 (april 2004): 117.
Desmidt, S., a. Prinzie, and a. Decramer. “looking for the Value of mission Statements: a meta-analysis of 20 years of research.” Management Decision, 49 (2011): 468–483.
Devasagayam, r., n. r. Stark, and l. S. Valestin. “examining the linearity of Customer Satisfaction: return on Satisfaction as an alternative.” Business Perspectives and Research, 1 (2013): 1–8.
Hollensbe, elaine, Charles Wookey, loughlin Hickey, and gerard george, “organizations with Purpose.” Academy of Management Journal 57, no. 5 (october 2014):
1227–1234.
ibarra, Herminia, and otilia obodaru. “Women and the Vision thing.” Harvard Business Review (January 2009): 62–71.
lissak, michael, and Johan roos. “Be Coherent, not Visionary.” Long Range Planning 34, no. 1 (February 2001): 53.
luo, X, J. Wieseke, and C. Homburg. “incentivizing Ceos to Build Customer- and employee-Firm relations for Higher Customer Satisfaction and Firm Value.” Journal of the Academy of Marketing Science, 40 (2012): 745–758.
macmillan, martin i. “managing your mission—Critical Knowledge.” Harvard Business Review (January–February 2015).
newsom, mi Kyong, David a. Collier, and eric o. olsen.
“using ‘Biztainment’ to gain Competitive advantage.”
Business Horizons (march–april 2009): 167–166.
nonprofit organization mission Statements, http://www.mis- sionstatements.com/nonprofit_mission_statements.html Palmer, t. B., and J. C. Short. “mission Statements in u.S.
Colleges of Business: an empirical examination of their Content with linkages to Configurations and Performance.” Academy of Management Learning &
Education 7 (2008): 454–470.
Peyrefitte, Joe, and Forest r. David. “a Content analysis of the mission Statements of united States Firms in Four industries.” International Journal of Management, 23 (2006): 296–301.
Powers, e. l. “organizational mission Statement guidelines revisited.” International Journal of Management &
Information Systems 16 (2012): 281–290.
rarick, C., and J. Vitton. “mission Statements that make Cents.” Journal of Business Strategy, 16 (1995): 11–12.
restaurant mission Statements, http://www.missionstatements.
com/restaurant_mission_statements.html
School mission Statements, http://www.missionstatements.
com/school_mission_statements.html
Sidhu, J. “mission Statements: is it time to Shelve them?”
European Management Journal 21 (2003): 439–446.
Smith, m., r. B. Heady, P. P. Carson, and K. D. Carson. “Do missions accomplish their missions? an exploratory analysis of mission Statement Content and organizational longevity.” The Journal of Applied Management and Entrepreneurship 6 (2001): 75–96.
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Source: Jacek Chabraszewski/Fotolia
59
AssurAnce of LeArning exercises
The following exercises are found at the end of this chapter:
exercise 3A Competitive Intelligence (CI) Certification
exercise 3B Develop an EFE Matrix for Hershey Company
exercise 3c Perform an External Assessment
exercise 3D Develop an EFE Matrix for Your University
exercise 3e Comparing Chipotle Mexican Grill to Panera Bread and Moe’s Southwest Grill
exercise 3f Develop a Competitive Profile Matrix for Hershey Company
exercise 3g Develop a Competitive Profile Matrix for Your University LeArning oBjectives
After studying this chapter, you should be able to do the following:
3-1. Describe the nature and purpose of an external assessment in formulating strategies.
3-2. Identify and discuss 10 external forces that must be examined in formulating strate- gies: economic, social, cultural, demographic, environmental, political, governmental, legal, technological, and competitive.
3-3. Explain Porter’s Five Forces Model and its relevance in formulating strategies.
3-4. Describe key sources of information used for locating vital external information.
3-5. Discuss forecasting tools and techniques.
3-6. Explain how to develop and use an External Factor Evaluation (EFE) Matrix.
3-7. Explain how to develop and use a Competitive Profile Matrix.
The External Assessment
This chapter examines the tools and concepts needed to conduct an external strategic- management audit (sometimes called environmental scanning or industry analysis).
An external audit focuses on identifying and evaluating trends and events beyond the control of a single firm, such as increased foreign competition, population shifts to coastal areas of the United States, an aging society, and taxing Internet sales. An external audit reveals key opportunities and threats confronting an organization, so managers can formulate strategies to take advantage of the opportunities and avoid or reduce the impact of threats. This chapter pres- ents a practical framework for gathering, assimilating, and analyzing external information. The Industrial Organization (I/O) view of strategic management is discussed.
The company showcased here for practicing exemplary strategic management is Chipotle Mexican Grill. Chipotle is a rapidly growing firm with highly motivated employees who exe- cute daily a company strategy to capitalize on the public’s increasing concern for animal wel- fare and preference for organic foods. Chipotle’s most recent sales and earnings were reduced somewhat due to its stance on various ethical issues. This chapter addresses whether companies should take a stand on political and societal issues. Do you think companies should?
exempLAry compAny showcAseD
Chipotle Mexican Grill (CMG)
Headquartered in Denver, Colorado, Chipotle is a chain of about 1,700 restaurants in the United States, the United Kingdom, Canada, Germany, and France, specializing in burritos, tacos, and salads.
Chipotle is the Mexican-Spanish name for smoked and dried jalapeno chili pepper. In a recent quarter, Chipotle opened another 45 restau- rants, including 17 outside the United States. Chipotle Mexican Grill has a vision statement called Food with Integrity, which highlights the company’s efforts to use organic ingredients, and to serve more natu- rally raised meat than any other restaurant chain. Through the compa- ny’s vision of Food with Integrity, Chipotle seeks better food from using ingredients that are fresh and sustainably grown, as well as raised responsibly with respect for the animals, the land, and the farmers who produce the food. Chipotle has reported revenue growth of more than 20 percent annually in the last five years, while rival, traditional, sit- down restaurants are slimming down and growing slowly. The entire restaurant sector is growing about 1 percent annually. Considered to be one of the first so-called fast-casual dining establishments, similar to Panera Bread (stock symbol = PNRA) and Moe’s Southwest Grill (pri- vate company), Chipotle is rapidly growing, while many mainstream restaurants such as Red Lobster, Applebee’s, Olive Garden, and even McDonald’s are struggling.
Effective July 1, 2015, Chipotle extended many benefits, includ- ing tuition reimbursements, sick pay, and paid vacation, previously available only to salaried employees, to its part-time and entry-level workers. The new benefits are available to all hourly and salaried employees, including cashiers and takeout specialists, who have worked at the company for one year. J. D. Cummings, Chipotle’s recruitment strategy manager, states, “We want to invest in the best people we have and keep them with us; we want to recruit and retain high school and college students, a target demographic for entry- level positions.”
Chipotle pro- motes nearly 100 percent of its managers from within, as it did for 9,000 manag- ers in fiscal 2014.
The company also uses nontradi- tional marketing practices such as producing Web videos, sponsor- ing food and
music festivals, and partnering with local farmers’ markets. Recently, Chipotle tried to meet customer and societal expectations for the humane treatment of animals by withdrawing a popular pork prod- uct, carnitas, (slow-simmered pork) from one third of its restaurants, because a particular supplier “was not treating hogs humanely.”
Chipotle’s actions, however, reveal how healthier, more humane op- tions pose difficulties for any chain trying to balance price, standards, demand, and perception with profitability and growth. Chipotle’s guidelines say “Pigs are to be housed in humane conditions with ac- cess to the outdoors rather than in pens.” The chain also tries to use antibiotic-free and hormone-free meat when it can, consistent with societal expectations.
Source: Based on Ciaran McEvoy, “Fast-Casual Chains Eating Rival’s Lunch,”
Investor’s Business Daily, March 3, 2014, A1, A6. See also Vance Cariaga,
“Chipotle Sticks to Its Own Recipe to Deliver Steady Gains,” Investor’s Business Daily, August 12, 2014, A5.
The Purpose and Nature of an External Audit
The purpose of an external audit is to develop a finite list of opportunities that could benefit a firm as well as threats that should be avoided. As the term finite suggests, the external audit is not aimed at developing an exhaustive list of every possible factor that could influence the business;
rather, it is aimed at identifying key variables that offer actionable responses. Firms should be able to respond either offensively or defensively to the factors by formulating strategies that take advantage of external opportunities or that minimize the impact of potential threats. Figure 3-1 illustrates with white shading how the external audit fits into the strategic-management process.
Key External Forces
External forces can be divided into five broad categories: (1) economic forces; (2) social, cul- tural, demographic, and natural environment forces; (3) political, governmental, and legal forces;
(4) technological forces; and (5) competitive forces. Relationships among these forces and an
Strategy
Formulation Strategy
Implementation Strategy
Evaluation Chapter 10: Business Ethics/Social Responsibility/Environmental Sustainability Issues
Chapter 11: Global/International Issues
Measure and Evaluate Performance Chapter 9 Implement
Strategies—
Marketing, Finance, Accounting, R&D,
and MIS Issues Chapter 8 Implement
Strategies—
Management Issues Chapter 7 Develop Vision
and Mission Statements Chapter 2
Establish Long-Term Objectives Chapter 5
Generate, Evaluate, and Select Strategies Chapter 6
Perform Internal Audit
Chapter 4 Perform External Audit
Chapter 3
Figure 3-1
A Comprehensive Strategic-Management Model
Source: Fred R. David, “How Companies Define Their Mission,” Long Range Planning 22, no. 3 (June 1988): 40. See also Anik Ratnaningsih, Nadjadji Anwar, Patdono Suwignjo, and Putu Artama Wiguna, “Balance Scorecard of David’s Strategic Modeling at Industrial Business for National Construction Contractor of Indonesia,” Journal of Mathematics and Technology, no. 4 (October 2010): 20.
organization are depicted in Figure 3-2. External trends and events, such as rising food prices and people in African countries learning about online services, significantly affect products, services, markets, and organizations worldwide.
Important Note: When identifying and prioritizing key external factors in strategic planning, make sure the factors selected are (1) specific (i.e., quantified to the extent possible); (2) action- able (i.e., meaningful in terms of having strategic implications) and (3) stated as external trends, events, or facts rather than as strategies the firm could pursue. For example, regarding action- able, “the stock market is volatile” is not actionable because there is no apparent strategy that the firm could formulate to capitalize on that factor. In contrast, a factor such as “the GDP of Brazil is 6.8 percent” is actionable because the firm should perhaps open 100 new stores in Brazil. In other words, select factors that will be helpful in deciding what to recommend the firm should do, rather than selecting nebulous factors too vague for an actionable response. Similarly, “to expand into Europe” is not an appropriate opportunity, because it is both vague and is a strategy;
the better opportunity statement would be “the value of the euro has increased 5 percent versus the U.S. dollar in the last twelve months.”
Changes in external forces translate into changes in consumer demand for both industrial and consumer products and services. External forces affect the types of products developed, the nature of positioning and market segmentation strategies, the type of services offered, and the choice of businesses to acquire or sell. External forces have a direct impact on both suppliers and distributors. Identifying and evaluating external opportunities and threats enables organizations to develop a clear mission, to design strategies to achieve long-term objectives, and to develop policies to achieve annual objectives.
The increasing complexity of business today is evidenced by more countries developing the capacity and will to compete aggressively in world markets. Foreign businesses and countries are willing to learn, adapt, innovate, and invent to compete successfully in the marketplace. Fast growth worldwide, recently reported by Alibaba and Samsung, are examples.
The Process of Performing an External Audit
The process of performing an external audit must involve as many managers and employees as possible. As emphasized in previous chapters, involvement in the strategic-management process can lead to understanding and commitment from organizational members. Individuals appreci- ate having the opportunity to contribute ideas and to gain a better understanding of their firm’s industry, competitors, and markets. Key external factors can vary over time and by industry.
Competitors Suppliers Distributors
Creditors Customers Employees Communities
Managers Stockholders Labor unions Governments Trade associations Special interest groups
Products Services Markets Natural environment
AN ORGANIZATION’S OPPORTUNITIES AND
THREATS Economic forces
Social, cultural, demographic, and natural environment forces Political, legal, and governmental forces
Technological forces Competitive forces
Figure 3-2
Relationships Between Key External Forces and an Organization