How does Mission help the Firm?

The mission statement helps a firm in several ways

Reference Point: The mission guides the operations of a firm by providing proper direction and a sense of purpose. Objectives and strategies are generally designed, keeping the broad picture offered by mission in the background.

Educative Value: The mission educates people about corporate vision and purpose: why the company is there, what existence it seeks, where it wants to go in future etc. When everyone is able to understand the corporate mission properly a kind of unity of purpose is achieved.

Motivating Force: The mission offers a broad roadmap to all people. They draw meaning and direction from it. The targets are set, work is assigned, resources are committed to best use and people can now compare themselves against the benchmark set by the mission. They can change direction whenever they go off the track and set everything along right paths. Mission helps people understand organizational priorities and commit resources accordingly.

Productive use of Resource

The mission helps ensure that the organizations will not pursue conflicting purposes. It does not allow the constituent elements of an organization to move in different directions. As a result resources are put to best use avoiding waste and conflict at various levels. Thus corporate mission helps in focusing human effort, ensuring compatibility of organizational purposes, provides rationale for resource allocation, indicates broad areas of job responsibility and offers the foundation for organizational objectives.

King and Cleland recommend that organization carefully develop a written mission statement for the following reasons:

1) To ensure unanimity of purpose within the organization
2) To provide a basis or standard for allocating organizational resources.
3) To establish a general tone or organizational climate.
4) To serve as a focal point for individuals to identify with the organization’s purpose and direction; and to deter those who cannot from participating further as the organization’s activities.
5) To facilitate the translation of objectives into a work structure involving the assignment of the tasks to responsible elements within the organization.
6) To specify organizational purposes and the translation of these purposes into objectives in such a way that cost time and performance parameters can be assessed and controlled . The principal value of a mission statement as a tool of strategic management is derived from its specification of the ultimate aims of firms.

It provides managers with a unity of direction that transcends individual, parochial and transitory needs. It promotes a sense of shared expectations among all levels and generation of employees. It consolidates values over time and across individuals and interest groups. It projects a sense of worth and intent that can be identified and assimilated by company outsiders. Finally, it affirms the company’s commitment to responsible action, which is symbiotic with its need to preserve and protect the essential claims of insiders for sustained survival, growth and profitability of the firm (Pearce).

How do firms formulate mission?

The mission in a number of cases, is drawn up by the Owner Manager or Chief Executive Officer or Top management based on certain beliefs, desires and aspirations.

1) The product or service of the business can provide benefits at least equal to its price.
2) The product or service can satisfy a customer need of specific market segments that is currently not being met adequately.
3) The technology that is to be used in production will provide a cost and quality competitive product or service.
4) With hard work and the support of others, the business can not only survive but also grow and be profitable.
5) The management philosophy of the business will result in a favorable public image and will provide financial and psychological rewards for those who are willing to invest their labor and money in helping the business to succeed.
6) The entrepreneur’s self concept of the business can be communicated to and adapted by employees and stockholder.

At times, organization engages consultants to draw up the mission or to revise an existing one. The whole process is a time consuming one. A number of brainstorming sessions may be required. Opinions, ideas and suggestions could also be obtained from various groups.

Source: Strategic Management

  • It is not always right to say that Mission starts from the top.
    The top level may through the light.
    How ever Mission is developed by all concerned based on the Vision that the company has for each level and each department of a company.
    I draw my thoughts from Mr Stephen Covey.

  • It is not always that the top decides the Mission. Based on the Vision of the company, each level decides its Mission for each department to reach the vision. I draw my inspiration from Mr Stephen Covey.