3 – Defining Missions, Goals and Objectives

Introduction

“A mission statement is a long-term expression of intent.” A concise mission statement is required for efficiently creating goals and developing strategies.

A mission statement states the objective or rationale for the organization’s existence. A well-crafted mission statement establishes the core, distinct purpose that distinguishes it from other businesses and identifies the extent of its activities regarding items produced and markets served. It also incorporates the company’s business ideology and respects its personnel. In a nutshell, the mission explains the company’s product, market, and technological areas of emphasis in a way that represents the strategic decision-makers’ values and priorities.

According to Fred R. David, a mission statement is sometimes known as a credo statement, a declaration of purpose, a statement of philosophy, and so on. It reveals what a company aspires to be and who it wishes to serve. It outlines an organisation’s goal, its consumers, goods, markets, philosophy, and core technologies. When these mission statement components are combined, they answer a critical question about the enterprise: “What is our business?”

3.1 Mission Definition

Thompson defines mission as “The essential purpose of the organisation, concerning particularly why it exists, the nature of the business it is in, and the customers it seeks to serve and satisfy”. Hunger and Wheelen call the mission the “purpose or reason for the organisation’s existence”.

A mission statement is a sentence that describes the function, markets, and competitive advantages of a corporation. It is a concise written explanation of your company’s objectives and philosophies. It outlines what an organisation is, why it exists, and why it exists. A mission statement should, at a minimum, establish who the company’s key consumers are, identify the products and services it produces, and indicate the geographical location in which it works.

Example:

– Ranbaxy Petrochemicals: To become a research-based global company.

Reliance Industries aims to become a significant global chemical business player and expand into other growth industries, such as infrastructure.

– ONGC: To stimulate, continue, and accelerate efforts to develop and maximize the energy sector’s contribution to the country’s economy.

– Cadbury India: To attain a leadership position in the confectionery market and achieve a strong national presence in the food and drinks sector.

Hindustan Lever: Our purpose is to meet the everyday needs of people everywhere, anticipate the aspirations of our consumers and customers, and respond creatively and competitively with branded products and services that raise the quality of life.

– McDonald’s: To offer customers fast food prepared in the same high quality worldwide, tasty and reasonably priced, delivered in a consistent low-key décor and friendly manner.

The majority of the mission statements establish the direction of the corporate organisation by outlining the important markets it intends to serve.

Missions have one or more of the following five distinct and distinguishable components:

1. Customers

2. goods or services

3. Markets

4. Growth anxiety

5. Philosophy

Once a mission statement is established, every organisation must examine and alter it regularly to ensure it appropriately reflects its aims as business and economic climates change.

3.2 Mission Statement Importance

The mission statement aims to explain to all stakeholders within and outside the organisation what the company stands for and where it is headed. A mission statement is necessary for the following reasons:

– It aids in ensuring organisational unity of purpose.

– It serves as a foundation or standard for distributing organisational resources.

– It establishes the overall tone or environment of the organisation.

– It acts as a focal point for individuals

– It defines the organisational purpose and then assists in translating that purpose into objectives that can be analysed and controlled in terms of cost, time, and performance.

– Creating a detailed mission statement is also crucial since it can reveal and settle contradictory opinions among management.

Vision and mission statements, according to Pearce (1982), have the following values:

– They give managers a sense of direction that transcends individual, parochial, and transient requirements.

– They foster a feeling of shared expectations among employees of all levels and generations.

– They consolidate values over time and across individuals and organisations of interest.

– They reflect a sense of worth and aim that outsiders can recognise and assimilate to the company.

– Finally, they reaffirm the company’s commitment to responsible conduct to safeguard and protect insiders’ key claims for the firm’s long-term survival, growth, and profitability.

According to Fred R. David, a mission statement is more than a statement of purpose. It is

– A statement of attitude and approach

– A statement of client orientation

– A statement of social policy and duty

3.3 Mission Statement Characteristics

An excellent mission statement should be brief, to the point, and simple to comprehend. As a result, it should have the following characteristics:

1) It should not be too long:

A mission statement should be succinct.

2) Clearly articulated:

It should be simple to grasp so that the organization’s beliefs, purposes, and goals are evident to everyone and serve as a guide for them.

3) Broad but not overly general:

A mission statement should strike a delicate balance between specificity and generality.

4) Motivating:

A mission statement should compel readers to take action. Employees should find it rewarding to work for such a company.

5) Elicit favourable feelings:

It should elicit favourable feelings and emotions in employees and outsiders regarding the organisation.

6) Demonstrate the firm’s worth:

A mission statement should convey that the company is successful, has a clear path, and deserves support and investment.

7) Relevant:

A mission statement should reflect the organization’s history, culture, and shared values.

8) Current:

A mission statement may become out of date over time. Peter Drucker states, “Few mission statements have anything resembling a life expectancy of thirty, let alone fifty years.” “To be good enough for ten years is perhaps all that can be expected.” Changes in environmental and organisational circumstances may prompt a rewrite of the mission statement.

9) Individual:

An organisation’s mission statement should establish the company’s originality and uniqueness.

10) Persistent:

A mission statement should lead and encourage the pursuit of organisational goals indefinitely. It may not be entirely realised, but it should be a challenge for the organization’s managers and staff.

11) Dynamic:

A mission statement should be dynamic, allowing judgments on the most viable and least attractive growth directions.

11) Guidance foundation:

The mission statement should give appropriate criteria for selecting a foundation for producing and screening strategic possibilities.

12) Customer orientation:

A good mission statement identifies and attracts customers by identifying the utility of a firm’s products or services to its customers.

13) A social policy declaration:

A mission statement should include its philosophy on social responsibility and its obligations to stakeholders and society at large.

14) Values, beliefs, and philosophy:

The mission statement should emphasise the company’s values; company philosophy, often known as “company credo,” usually accompanies or appears within the mission statement.

3.4 Mission Statement Component

The length, content, manner, and specificity of mission statements vary. However, most agree that a good mission statement must incorporate all crucial components. Because a mission statement is frequently the most visible and public aspect of the strategic management process, it must have all of the following vital components:

Primary product or service: What are the company’s main products or services?

Primary markets: In which markets does the firm compete?

Primary technology: Is the company technologically current?

Clients: Who are the firm’s clients?

Survival, expansion, and profitability: Is the company committed to growth and financial stability?

Company philosophy: What are the firm’s fundamental ideas, values, objectives, and ethical priorities?

Company self-concept: What is the firm’s unique expertise or main competitive advantage?

Public image concerns: Is the company concerned about social, community, and environmental issues?

Concern for employees: Are employers regarded as a valued asset by the company?

Quality concern: Is the company committed to the most significant level of quality?

Markets, Products or Services, and Technology

Identifying the firm’s primary product or service, markets, and technology is essential to the mission statement. These three elements describe the company’s operations.

1) Survival, expansion, and profitability

Every company must ensure its survival by focusing on growth and profitability. These three economic aims guide almost every corporate organization’s strategic direction.

A company that cannot endure will be unable to meet its stakeholders’ goals. Profitability is the primary goal of any organisation, and profit over time is the clearest indicator of a company’s capacity to satisfy the demands and wants of all stakeholders. A company’s survival and profitability are intrinsically related to its growth.

2) Philosophy of the Company

The mission statement usually includes the expression of a firm’s philosophy (also known as the company creed). It defines the fundamental values, beliefs, and goals to which the firm’s strategic decision-makers are devoted in managing the company. The corporate philosophy paints a distinct and accurate picture of the organization’s managerial perspective.

3) Self-concept of the Company

Individuals and businesses both need to understand themselves. A company’s capacity to survive in a highly competitive environment depends on a realistic assessment of its strengths and flaws. The description of the firm’s self-concept paints a vivid picture of the firm’s self-image.

4) The Public Image

Mission statements should mirror the public’s expectations of the firm because this increases the likelihood of the firm’s goals being met.

“Johnson & Johnson make safe products” reflects the company’s customers’ expectations of safe products.

A poor public image can sometimes be rectified by stressing the positive features in mission statements.

5) Employees’ Concern

Mission statements could also express an organization’s interest in improving the quality of work life, ensuring fair opportunity for all, promoting employee welfare initiatives, and so on.

6) Customers

Most firms worldwide assert that “the customer is our first priority.” Managers recognise the significance of exceptional customer service when focusing on client satisfaction. As a result, many businesses have made customer service a central component of their mission statement.

7) Quality

Many corporate philosophies have placed a greater focus on quality.

For instance, Motorola’s mission statement states that “dedication to excellence is a way of life at our organisation, so much so that it extends beyond rhetorical platitudes.”

3.5 Mission Statement Development

There is no set technique for developing mission statements, and different companies take different approaches. As shown by the strategic management model, a clear mission statement is required before alternative strategies can be developed and implemented. It is critical to involve as many managers as possible in establishing a mission statement since involvement leads to individuals becoming dedicated to the organization’s mission.

Mission statements are typically written as follows:

In many cases, the mission is inherited, meaning that the founder defines the mission, which may remain intact over time or be amended as circumstances change.

In other circumstances, the mission statement is created by the CEO and board of directors or by an explicitly formed committee of strategists.

It is also customary to hire consultants to create the mission statement.

To design a mission statement, many organisations arrange brainstorming workshops with senior executives. Soliciting employee feedback is also prevalent.

An ideal way to draft a mission statement, according to Fred R. David, would be to select many publications concerning mission statements and urge all managers to study them as background knowledge. Then, managers should be requested to write a mission statement for the organisation. A facilitator or a committee of top managers should combine these statements into a single document and distribute it to all managers. The mission statement is then finalised after input from all managers is gathered in a meeting. As a result, drafting a mission statement represents a fantastic chance for strategists to gain the necessary support from all of the firm’s managers.

When the document is finished, a decision must be made on how best to communicate the mission to an organisation’s management, employees, and external stakeholders. Some organisations even create a film to illustrate the mission statement and how it was made.

Indian firms’ practice appears to be consultative-participatory. For example, at Mahindra and Mahindra, workshops were held at two levels inside the organisation, with facilitators from the corporate planning division. The State Bank of India took a step further and invited labour unions to participate. Satyam Computers took it further by incorporating their joint venture firms and international clientele.

3.6 Assessing Mission Statement

For a mission statement to be effective, it must meet the 10 characteristics listed below:

1. All parties involved may comprehend and agree on the mission statement. The organisation can articulate and relate to it.

2. The mission statement is short enough that most people will remember it.

3. The mission statement clearly defines the organization’s purpose. This includes an explicit declaration about:

4. What needs is the organisation seeking to meet (rather than what items or services are offered)?

5. Who are the organization’s target audiences?

6. How does the organisation intend to conduct business, i.e., what are its key technologies?

7. The mission statement should be centred on a specific strategic thrust.

8. The mission statement should reflect the organization’s specific competency (e.g., what does it do best? What is its distinguishing feature?)

9. The mission statement should be broad enough to allow for flexibility in implementation while not being so wide that it allows for a lack of concentration.

10. The mission statement should serve as a framework and a mechanism for the organisation to make decisions.

The mission statement must reflect the organization’s values, beliefs, and operational philosophy. Achievable goals should be reflected in the mission statement.

The mission statement should be crafted to serve as a source of energy and a rallying point for the organisation (i.e., it should reflect a commitment to the vision).

3.7 Distinguishing Vision from Mission

In the last section, we distinguished between vision and mission statements; in this section, we expand on that distinction. A mission statement describes what the organisation is now, but a vision statement describes what it aspires to be. A vision statement outlines more of a direction in terms of “where we are headed” and “what we want to become,” whereas a company’s mission statement broadly emphasises the organization’s “business purpose.”

3.8 Goals and Objectives Concept

3.8.1 Goals

The terms “goals and objectives” are employed in several contexts, often contradictorily.

The terms “goal” and “objective” are frequently used interchangeably. However, other authors prefer to distinguish between the two names.

A goal is an open-ended statement of what one wishes to achieve without quantifying what is to be accomplished and no time frame for accomplishment. A simple statement such as “improved profitability” is thus a goal rather than an aim because it does not specify how much profit the organisation wishes to make. The results of planned action are defined as objectives. They specify what needs to be done by when and should be quantifiable. For example, “raise profits by 10% over the previous year” is a goal.

As seen from the examples above, “goals” denote what an organisation aims to achieve in the future. They indicate a future state or outcome of the current activity. “Objectives” are the goals that specify how they will be reached. Objectives, in this sense, make goals operational. In contrast to broad goals, objectives are concrete and precise. While goals might be qualitative in nature, objectives are often quantitative, measurable, and compared.

However, some writers have reversed the use, referring to targets as desired long-term results and aims as desired short-term results. Others use the terms interchangeably, as though they signify the same thing. These writers say semantic distinctions between goals and objectives yield little benefit. The crucial thing to remember is that the outcomes an organisation wants to achieve vary in scope and time frame. To prevent ambiguity, it is preferable to use the phrase “objectives” to refer to the performance targets and outcomes an organisation tries to achieve. We can define the appropriate time frame by using the adjectives long-term (long-range) and short-term (short-range), and we can try to describe their intended breadth and level in the organisation by using expressions like broad objectives, functional objectives, corporate objectives, and so on.

Some of the areas in which a company’s aims and objectives may be established are:

Earnings potential (net profit)

Effectiveness (low costs, etc.)

Development (increase in sales, etc.)

Shareholder fortunes (dividends etc)

Resource utilisation (return on investment)

Market dominance (market share, etc.)

Goals Declared vs. Goals Achieved

The true aims of an organisation are operational goals, and the stated aims of an organisation are its official goals. Regardless of what the formal goals state, operational goals inform us what the organization is attempting to accomplish. Official goals often represent the company’s underlying ideology and are presented in abstract words, such as “adequate profit,” “market leadership,” and so on.

The following are the most significant operational goals, according to Charles Perrow:

1. Environmental Aims:

An organisation should be attentive to the broader problems of the communities in which it operates, and its goals should satisfy people in the external environment. Customer satisfaction and social responsibility, for example, may be key environmental goals.

2. Output Objectives:

Output goals are associated with identifying client needs and include decisions such as which markets to serve, which product lines to pursue, and so on.

3. System Goals:

These are goals related to the organization’s upkeep. Examples include expansion, profitability, and stability.

4. Product Goals:

These goals relate to the kind of items delivered to clients. They specify product quantity, quality, diversity, and innovativeness.

5. Derived Goals:

These goals are derived or secondary, such as contributing to political activities or supporting social service institutions.

3.8.2 Objectives

Objectives are the results or outcomes that an organisation wishes to attain in carrying out its core mission. The primary goal of goal planning is to translate the strategic vision and mission into precise performance targets. Objectives serve as yardsticks for measuring and tracking an organization’s performance and progress.

Objectives’ Characteristics:

Well-stated goals should be:

Specific

Quantifiable

Measurable

Clear

Consistent

Reasonable

Challenging

Include a deadline for completion.

Communicated within the organisation

Objectives Role:

Strategic management relies heavily on objectives. They are necessary for strategy design and implementation because they:

Give legitimacy;

State direction;

Aid in evaluation; and

Produce synergy.

They elucidate priorities

They focus coordination

They provide the basis for resource allocation

They serve as yardsticks for measuring development.

They serve as motivators.

The Characteristics of Objectives

The characteristics of objectives are as follows:

1) Hierarchy of Objectives:

In a multi-divisional company, goals should be established for each company and each division.

Objectives are typically created at the corporate, divisional, and functional levels, forming a hierarchy. The organization’s mission is at the top of the hierarchy. The goals at each level contribute to the goals at the next higher level.

2) Long-term and short-term goals

Organizations must define long-term and short-term objectives (long–term implies more than one year, while short–term means one year or less). Short-range objectives state the near–term results to be accomplished. By doing so, they indicate the speed and degree of performance aimed at each successive phase. If an organisation functions at the desired long-term level, short-term objectives can equal long-term ones. The most crucial instance in which short-term objectives deviate from long-term objectives occurs when managers attempt to improve organisational performance but cannot meet the long-term target in a single year. Short–term goals (one–year goals) are the means of obtaining long–term goals. A business that wants to double its sales in five years can’t wait until the third or fourth year of its five-year strategic plan. Short-term goals can, therefore, be used as stepping stones or milestones.

3) Multiplicity of Objectives

Organizations have a variety of goals. Objectives are likely to be multiple at each level of the hierarchy.

For example, the marketing division may have the goal of product sales and distribution. This goal can be divided into several objectives for the product, distribution, research, and promotion activities. To explain an organization’s singular, specific aim is to say very little about it. It turns out that there are various objectives at stake. This could be due to the enterprise’s need to address internal and external concerns successfully. Furthermore, no one goal can lead the organisation to long-term profitability and progress.

However, an organisation should not set too many objectives. If it does, it will lose concentration. Having too many goals has many issues.

Examples:

– They dilute the motivation for accomplishment

– Minor objectives are emphasised at the expense of significant objectives.

There is no agreement on how many objectives management can effectively handle. However, if there are so many that none receive appropriate attention, the execution of objectives becomes inefficient; caution is required. If the list becomes too long, it is a good idea to rank the relevance of each target.

Objectives Network:

The objectives constitute an interconnected network. They are linked and interdependent. One’s implementation may have an impact on the other’s implementation. People may pursue goals beneficial to their function but destructive to the organisation if there is no consistency between company objectives. As a result, objectives should not only “fit,” but also reinforce one another. “It is bad enough when goals do not support and interlock with one another,” Koontz et al. observe. When they collide, the results could be disastrous.”