Introduction
Strategic management is always linked to a competitive environment. Even the term “strategy“ emerged in warfare in which one party tries to win over its rival. Nowadays, almost all businesses are operating in some degree of a competitive environment. Scholars usually define strategic management as a means to win a competition. Hitt et al. (2007) defined strategic management as a rational approach used by organizations to achieve strategic competitiveness and obtain above-average returns. Alexander (2019) asserted that strategic management originates from making plans to secure a pathway in a competitive environment for a vision of the future using existing resources. This plan-making in strategic management involves various steps. However, the most crucial step is to formulate a strong vision and mission statement (Taiwo et al., 2016).
This article will analyze the role of vision and mission in the strategic management process, and how the measurement of the achievement of vision and mission. This article will also analyze the role of strong leadership in the formulation of vision and mission, and whether the internal or external view of the organization is the most relevant to the formulation of a firm’s vision and mission.
How Vision and Mission Statements Form the Strategic Management Process
To achieve strategic competitiveness, an organization should have a clear view of its identity and its purpose. A strong vision and mission statement would describe what the organization is and where it is going. Vision is an image of what an organization wants to be and what it seeks to achieve. A vision statement articulates the ideal description of a firm and its intended future (Hitt et al., 2007). The mission will provide the path that will embody the vision. An explicit vision and mission statement would answer what is the battle that the company is competing with and how the company will try to win it. Hence, the vision and mission formed the strategic management process.
While a clear purpose can set a clear pathway to achieve strategic competitiveness, it can also motivate people to pursue the organization’s goals. Scholars have researched that properly crafted and implemented vision and mission statements could influence organizational employees in their daily activities and help in the accomplishment of organizational goals (Taiwo et al., 2016). Vision is often seen as the key tool for executives to inspire people in an organization (Kennedy, 2020). Fully inspired people, guided by a strong vision and mission, can create significant change that will leverage the strategic management process.
Three Most Important Ideas for a Firm in a Global Market
A company competing in a global market should have a clear vision that will guide the people to achieve the organization’s goals. The three most important ideas that must be acquired by a firm in the global market are to have clear goal statements which ultimately embody the vision and mission, to have more balanced measures to assess the company’s performance, and to have a solid competitive advantage. These three ideas can be addressed as follow.
1. SMART Goals to Pursue the Vision and Mission Statement
The vision and mission provide a broad sense of an organization’s purpose. Kennedy (2020) posited that to pursue these overall aspirations, companies must formulate goals, which are more specific targets providing clear and tangible guidance for the employees in their daily work. For the goals to be effective, they need to be specific, measurable, attainable, realistic, and time-bound; abbreviated as SMART.
SMART goals employ a specific set of criteria to assist in ensuring that objectives are clearly defined and attainable under a certain timeframe. A vague goal statement such as “having a green operation” will not be as effective as “achieving zero carbon footprint in 2025” or “recycling 100% waste by 2030”. Moreover, creating SMART goals can help align the firm’s priorities and resources. Without SMART goals, people may not be able to meet their goals only due to a lack of consensus on the definition of success (Boogard, 2021). This is why having SMART goals is one of the most important ideas to pursue the vision and mission, especially for a company that is competing globally.
2. Balanced Scorecard to Organize Performance Measures
Measuring organizational performance is a fundamental aspect of strategic management (Kennedy, 2020). Organizational performance would refer back to how well a company is working to achieve its vision, mission, and goals. Leaders must know how well their firms are performing to set strategic changes to planning ahead. However, performance measurement is a very complex concept that needs a lot of attention. While financial performance usually is the main aspect to be assessed, many other aspects may also be as important, especially in a large company competing in the global market.
A balanced scorecard was devised as a set of measures that can provide a comprehensive and quick view of the organization. It allows managers to observe the business from four important perspectives; customers, internal, innovation, and financial perspective. It also minimizes information overload by limiting the number of measures used, forcing managers to focus on only a few most important measures (Kaplan & Norton, 1992). Global companies usually have more sophisticated key performance indicators that require measurement beyond financial performance. Utilizing the balanced scorecard is one of the most important ideas to measure the organization’s performance.
1. Competitive Advantage
Ultimately, strategic management is aiming to thrive in a competitive environment. The strategic management process always aims for a set of qualities that will provide leverage for companies over their competitors (White, 2019). This is why competitive advantage is one of the most important ideas. Global companies have to deal with a more sophisticated competitive environment to create a competitive advantage. Research from 700 global companies shows that they established competitive advantages through four pillars: international networks, the culture of innovation, extensive knowledge of international markets, and skilled talents at all levels (Turi, 2018).
Strong Leaders in the Formulation of Vision and Mission Statements
More often, the visions and missions of a business are the leader’s dream (Alexander, 2019). Hitt et al. (2007) argued that forming an organization’s vision and mission is the final responsibility of the CEO, even though top-level leaders tend to involve a larger number of people. The most effective leaders understand how to delegate strategic responsibilities to people throughout the organization who could influence others. Strong leaders are also capable of assigning strategic leaders in different parts of the organization using the strategic management process to help the organization achieve its vision and mission.
Former General Electric CEO, Jack Welch, said that strong business leaders create a vision, articulate it, passionately own it, and relentlessly drive it to completion (Ketchen & Short, 2012). Leaders who set the vision and mission of an organization must be strong-willed individuals. The vision and mission statement will bring together the beliefs and governing principles of the organization to guide it into the future with a strong leader in front (Alexander, 2019).
Internal and External Factors for a Firm’s Vision and Mission Statements
Knowledge about the external and internal environments of an organization is essential because organizations form their vision and mission using the knowledge (Hitt et al., 2007). The question of whether internal or external factors are the most relevant to a firm’s vision and mission statement is rarely agreed upon. Taiwo et al. (2016) argued that vision typically depicts a destination and so it often focuses more internally than externally. On the contrary, Alexander (2019) argued that external aspects have a greater influence on the formulation of vision and mission statements since they will provide guidance for the firm into the future.
This question also brought two models for formulating a firm’s strategy. The first model is the resource-based model, which assumes that an organization’s unique resources, capabilities, and core competencies have more of an influence on its choice of strategies than the external environment. The second model is the I/O model, which assumes that an organization’s external environment has more influence on its strategy selection than the internal resources, capabilities, and core competencies (Hitt et al., 2007).
Global companies may not want to belittle one over another. Many scholars believe that both, internal and external, should be given their due significance. Vision and mission statements may more often be externally nuanced since they usually involve customers, the competition, or even the environment. However, internal knowledge, such as corporate culture and resources, may prove to be as important.
Also read about Walmart and Amazon’s Mission Statements
Conclusion
Vision and mission statements play a vital role in the strategic management process. The measure of an organization’s achievement will be dictated by its vision and mission. For a global company, the three most important ideas to pursue the vision and mission are to have SMART goals, to utilize a balanced scorecard in measuring performance, and to have a solid competitive advantage. Strong leadership will also play a key role in the formulation of vision and mission.
An organization formulates its vision and mission using the knowledge of its internal and external views. A company’s vision and mission statements may often be externally nuanced since it usually involves customers, the market, competition, or even the environment. However, internal perspectives, such as corporate culture and resources, may prove to be as important.
References Alexander, G. W. (2019). A Multi-case Qualitative Study of Factors Contributing to Formulating Vision and Mission Statements. LIGS University. https://ligsuniversity.com/blog/a-multi-case-qualitative-study-of-factors-contributing-to-formulating-vision-and-mission-statements Boogaard, K. (2021). How to write SMART goals. Work Life by Atlassian. https://www.atlassian.com/blog/productivity/how-to-write-smart-goals Hitt, M. A., Ireland, D. R., & Hoskisson, R. E. (2007). Strategic Management, Competitiveness and Globalization: Concepts and Cases (7th ed.). South-Western College Pub. Kaplan, R. S., & Norton, D. P. (1992). The Balanced Scorecard—Measures that Drive Performance. Harvard Business Review. https://hbr.org/1992/01/the-balanced-scorecard-measures-that-drive-performance-2 Kennedy, R. (2020). Strategic management. Virginia Tech Publishing. This book is licensed under a Creative Commons by-nc-sa 3.0 Attribution-NonCommercial-ShareAlike CC BY-NC-SA license. https://pressbooks.lib.vt.edu/strategicmanagement/ Ketchen, D & Short, J. (2012). Strategic Management: Evaluation and Execution. This book is licensed under a Creative Commons by-nc-sa 3.0 license. https://2012books.lardbucket.org/books/strategic-management-evaluation-and-execution/ Taiwo, A. A., Lawal, F. A., & Agwu, M. E. (2016). Vision and Mission in Organization: Myth or Heuristic Device? The International Journal Of Business & Management, 4(3), 127–134. https://www.researchgate.net/publication/312603042_Vision_and_Mission_in_Organization_Myth_or_Heuristic_Device Turi, P. (2018). Defining your global competitive advantage. EDC. https://www.edc.ca/en/blog/global-competitive-advantage-success-pillars.html White, J. (2019). Competitive Advantage: Definition, Examples and Global Impact. TheStreet. https://www.thestreet.com/personal-finance/education/what-is-competitive-advantage-14869235
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