Mission statements in modern organizational environment - Essay Example

? “In today’s turbulent business environment, mission ments have little or no use in determining organisational success and therefore, no real value or purpose”. 1. Introduction The continuous expansion of globalisation has led firms internationally to continuously change their strategies, aiming to develop a strategic advantage towards their rivals. The success of firms in the global market has been related to their mission statements, where the organizational values and aims are analysed. Mission statements are used for different purposes by organizations internationally (Kinney and Raiborn 2008); most commonly, mission statements are used as tools for presenting an organization’s values and directions (Bangs and Axman 2000). However, the role of mission statements in business success is not clear. Moreover, meeting the targets incorporated in the mission statement can be a challenging target for most organizations but not at the same level (Henry 2008). The role of mission statements in determining organizational success is examined in this paper; reference is also made to the value of mission statements as elements of the organization. Emphasis is given on the involvement of mission statements in different organizational activities but also on the value of mission statements as tools for promoting business strategies. It is proved that mission statements can help organizations to improve their performance, mainly n the long term (Gill 2006), but their ability to offer immediate benefits is highly doubted, taking into consideration the fact that market conditions have been significantly deteriorated increasing risks for firms operating in all industries. 2. Mission statements in modern organizational environment 2.1 The role and value of mission statements as described in the literature Mission statements are commonly used for highlighting an organization’s key values and targets (Lusthaus 2002). In other words, mission statements reveal each organization’s aims, as they are aligned with a series of ethical rules (Little and Marandi 2003). However, the form of mission statements is not standardized. In certain organizations, mission statements are short, not particularly descriptive, showing the general framework of organizational activities (Williams and Green 1997). In other cases, mission statements are used as tools for improving the image of the organization in the market and for enhancing the morale of stakeholders (Thompson and Martin 2010). This trend is clear in the literature published in the specific field. In order to understand the role and the significance of mission statements in modern organizations, it would be necessary to describe the context of these statements, as identified in businesses worldwide. Williams and Green (1997) support that the term ‘mission statements’ is often used instead of the term ‘vision statements’. At the next level, Williams and Green (1997) note that ‘a mission statement usually describes the broad direction of an organization’ (Williams and Green 1997, p.22). In this context, a mission statement is used for showing an organization’s key values and the nature of its activities (Williams and Green 1997, p.22). Moreover, Kinney and Raiborn (2008) explain that a mission statement is used in order to highlight the purpose of the organization and the ways in which the organization will respond to the needs of its customers. Kinney and Raiborn (2008) also note that organizations tend to use a mission statement along with a values statement in order to strengthen their position in the market. On the other hand, Henry (2008) claims that a mission statement is used just for explaining the reasons for the existence of the organization. Other issues could be possibly incorporated in an organization’s mission statement at the level that they are considered as necessary for improving the organization’s position in the market. According to Trevino and Nelson (2010) mission statements have a particular role in modern organizations; it is explained that these statements are used in order ‘to guide the beliefs of employees’ (Trevino and Nelson 2010, p.168), so that these beliefs are aligned with the organization’s rules and culture. In this context also, the mission statements are the tools for improving cooperation within the organization, at the level that employees work together for achieving the organization’s aims, as these aims are described in the mission statement (Seevers 2000). At this point, the following problem appears: the mission statement may not be fully aligned with the organizational culture (Trevino and Nelson 2010, p.168), especially in cases where the culture of the organization has been gradually transformed because of changes in the internal or the external organizational environment. Murphy and Willmott (2010) note that the primary role of a mission statement is to define an organization’s values and directions, especially in the long term. However, it seems that quite often the mission statement is also used as a communication tool between the organization and its stakeholders (Murphy and Willmott 2010, p.53). Capezio (2009) notes that the role of mission statements within modern organizations has two different, and critical, perspectives; mission statements are used for explaining the existence of a business in the market and for showing the level at which the entrepreneur, i.e. the business owner, is committed to his business (Capezio 2009, p.5). A different perspective of mission statements is included in the study of Mullins (2007). The above researcher claims that mission statements are used for the presentation of an organization’s key values; these values affect all organizational sectors, being involved in activities such as the strategic planning process, the allocation of tasks to employees, the communication with customers and so on (Mullins 2007). The value of mission statements is estimated by referring to their potential contribution in the improvement of organizational performance. The term performance in the above case is used for describing not just the profits of the organization but rather the quality of cooperation and communication among stakeholders, especially the employees and the customers (Gill 2006). From this point of view, a mission statement can be characterized as valuable when it is able to attract the attention of customers (Gill 2006). The use of short phrases, as mission statements, has become a common phenomenon. For example, in Tesco’s mission statement emphasis is given on ‘the organization’s core purpose: creating value for customers, to earn their lifetime loyalty’ (Gill 2006, p.121). It is made clear that mission statements do not need to be complex or analytical. They would rather incorporate, in just two or three phrases, the organization’s key values and aims, as these values and aims affect the communication between the organization and its stakeholders, especially the employees and the customers. In the study of Bangs and Axman (2000) reference is made to the view of ‘Frances Hesselbein, a former head of the Girl Scouts of America’ (Bangs and Axman 2000, p.9). When having to work on the organization’s mission statement F. Hesselbein and her colleagues tend to focus on a series of simple and short questions such as: ‘what is our business and who is our customer?’ (Business Week, March 26, 1990, cited by Bangs and Axman 2000, p.9). According to F. Hesselbein the answers to these questions were incorporated in just two or three phrases, which were used as the organization’s mission statement (Bangs and Axman 2000, p.9). Another aspect of mission statements is described in the study of Little and Marandi (2003). The above researchers support that mission statements need to highlight two key points: the current sector in which an organization operates and the sector in which the organization should enter (Little and Marandi 2003, p.118). Quite commonly, mission statements can serve other organizational needs, such as the need of the organization to explain to its customers how it is going to achieve its objectives, a practice used by Asda (Little and Marandi 2003, p.118). Mission statements, as described above, can be of critical value for the business success, defining the values and the priorities of each organization. However, not all mission statements are able to meet organizational needs. In fact, business success is depended on ‘the reasonable agreement between the vision and the mission statements’ (Lussier and Achua 2009, p.443), meaning that the organization’s purpose should be aligned with the organization’s aims. In any case, the criteria used in the development of mission statements are usually differentiated across organizations; this trend is made clear through the examples of mission statements provided below. Through these examples it is also feasible to identify the relationship between mission statements and business success. 2.2 Examples of mission statements Organizations use mission statements in order to promote different messages to consumers worldwide. Starbucks, a popular coffee brand, has emphasized on the relationship between the firm and its stakeholders. The firm’s mission statement reveals the firm’s willingness ‘to inspire and nurture the human spirit – one person, one cup and one neighbourhood at a time’ (Starbucks, Mission statement 2012). Particular reference is made to each of the firm’s stakeholders, especially customers, community and shareholders. The effectiveness of the firm’s mission statement can be checked through the organization’s report of 2011. In terms of profits, it seems that the firm has achieved its goals, expanding its customer base. The achievement of the organization’s aims, as included in its mission statement, cannot be easily checked since these aims are too generic, not focusing on the realization of specific events, but rather on thoughts regarding the relationship between the organization and its stakeholders. Figure 1 – Starbucks Financial performance from 2007-2011 (Source: Annual Report of 2011, p.2) Different priorities are incorporated in the mission statement of Zara. The above organization does not focus on the promotion of a spiritual relationship between the organization and its customers, but on the explanation of the firm’s measures in regard to sustainability (Zara, Mission statement, 2012). Zara is part of Inditex; the organization’s performance in 2011 was increased by 12% - compared to 2010 (Inditex, About us 2012). Sustainability is a key issue worldwide. The firm’s efforts to promote sustainability have been appreciated by its customers, as proved in the financial results of the organization. Another perspective of mission statement is presented in the case of Microsoft; the specific organization sets as its priority the awareness of all people in regard to their potentials (Microsoft 2012, Mission statement). There is no reference to interests of specific groups of stakeholders, neither on common problems, such as sustainability. Due to the nature of business activities, the wording of the firm’s mission statement is considered as quite effective, promoting people in increasing their potentials by using technology, as Microsoft could support this effort. Southwest Airlines, a well – known airline carrier emphasizes on the quality of customer services, as these services reflect the organization’s culture (Southwest Airlines 2012). Figure 2 below shows the firm’s share price for the last 5 years. It is clear that the organization has suffered from continuous changes in each financial performance, a fact that is reflected in the changes of its share price between 2007 and 2011. Keeping the quality of its services while having to control costs, in order to stabilize its financial performance, it would be a difficult target for the organization. Figure 2 – Share price of Southwest Airlines, from 2007 to 2012-03-25 (Source: Southwest Airlines, Investors 2012) The mission statements of all the above organizations are presented in Table 1 – Appendix, aiming to make clear their differences and common points. Through these mission statements it is made clear that each of these organizations has set different priorities and goals, under the influence of its environment and its resources. 3. Conclusion According to the issues discussed above, mission statements are valuable for business success. However, their structure and content is often inappropriate (Thompson and Martin 2010), a fact that limits their potentials to support business growth. On the other hand, mission statements are indispensable parts of organizations, meaning that all organizations use mission statements for stating their purpose and aims. The mission statements reviewed in this paper prove that each organization use different criteria when developing its mission statement, focusing on the achievement of different aims. Indeed, certain organizations use mission statements just as tools for communication with their stakeholders (Lusthaus 2002) while for others, mission statements are important in defining a firm’s purposes and values. In any case, the potentials of mission statements to serve different organizational needs are not limited, as for instance the use of mission statements for promoting motivation across the organization (Schermerhorn et al 2011). It should be noted though that the role of mission statements within organizations can be identified using different approaches; the review of the organization’s financial data is a common method for checking whether the targets of the organization in regard to its market position have been achieved (Ulaga 2001). The achievement of other organizational goals can be checked by using appropriate tools of research; for example, reports referring to organizational performance in regard to a critical factor, such as sustainability, community support and so on. It is made clear that mission statements can support business success but their role in increasing business performance or in achieving organizational goals is not standardized, being depended by the feasibility of the targets set (Herman 2006), the resources available, the conditions in the internal and the external environment and the support provided by the stakeholders. References A. Books Bangs, D., Axman, A. (2000) A crash course in marketing: low cost marketing strategies that will double your sales, not your expenses. Adams Media Capezio, P. (2009) Manager's Guide to Business Planning. McGraw-Hill Professional. Gill, R. (2006) Theory and practice of leadership. London: SAGE. Henry, A. (2008) Understanding Strategic Management. Oxford: Oxford University Press. Kinney, M., Raiborn, C. (2008) Cost Accounting: Foundations and Evolutions. Belmont: Cengage Learning. Little, E., Marandi, E. (2003) Relationship marketing management. Belmont: Cengage Learning. Lussier, R., Achua, C. (2009) Leadership: Theory, Application, & Skill Development. Belmont: Cengage Learning. Lusthaus, C. (2002) Organizational assessment: a framework for improving performance. Ottawa: IDRC Mullins, L. (2007) Management and organisational behavior. Essex: Pearson Education. Murphy, D., Willmott, H. (2010) Organization theory and design. Belmont: Cengage Learning. Schermerhorn, J., Osborn, R., Uhl-Bien, M. (2011) Organizational Behavior. Hoboken: John Wiley and Sons. Thompson, J., Martin, F. (2010) Strategic Management. Belmont: Cengage Learning. Trevino, L., Nelson, K. (2010) Managing Business Ethics. Hoboken: John Wiley and Sons. Williams, T., Green, A. (1997) The business approach to training. Aldershot: Gower Publishing. B. Journals Herman, L. (2006) Should Mission Statements Be Promises? (And should they have to be?) The Hauser Center for Nonprofit Organizations. Harvard University October 2006. Working Paper No. 33.5 Available at [Accessed 24 March 2012]. Seevers, B. (2000) Identifying and clarifying organizational values. Journal of Agricultural Education, Vol 41, Issue 3, pp.70-79 Available at [Accessed 24 March 2012]. Ulaga, W. (2001) Customer Value in Business Markets- An Agenda for Inquiry. Industrial Marketing Management 30, pp. 315–319. Available at [Accessed 24 March 2012]. C. Websites of organizations Inditex (2012) About us. Available at [Accessed 24 March 2012]. Microsoft (2012) Mission statement. Available at < http://www.microsoft.com/about/en/us/default.aspx> [Accessed 24 March 2012]. Southwest Airlines (2012) Mission statement. Available at [Accessed 24 March 2012]. Starbucks (2012) Mission statement. Available at [Accessed 24 March 2012]. Zara (2012) Mission statement. Available at [Accessed 24 March 2012]. Appendix Company Mission statement Starbucks To inspire and nurture the human spirit – one person, one cup and one neighborhood at a time (Starbucks, corporate website 2012, mission statement) Zara Through Zara’s business model, we aim to contribute to the sustainable development of society and that of the environment with which we interacts (Zara, corporate website 2012, mission statement). Microsoft At Microsoft, our mission and values are to help people and businesses throughout the world to realize their full potential (Microsoft, corporate website 2012, mission statement). Southwest Airlines The mission of Southwest Airlines is dedication to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit (Southwest Airlines, corporate website 2012, mission statement). Read More