pursued ethically promotes the survival and prosperity of the firm. As Chapter 26 discusses, directors of a firm are obliged to make decisions in the shareholders’ best interests.
EXHIBIT 6.1 Examples of Mission Statements
| American Family Insurance Group | “The mission of the American Family Insurance Group is to provide financial protection for qualified individuals, families, and business enterprises. We will do so on a profitable basis in an expanding geographic territory. Our primary business focus will be to deliver personal lines insurance products through an exclusive agency force.” (p. 59) |
| Anheuser-Busch Companies, Inc. | “The mission of Anheuser-Busch is toBe the world’s beer companyEnrich and entertain a global audienceDeliver superior returns to our shareholders.” (p. 71) |
| Autodesk, Inc. | “To create quality software solutions and support services that foster innovation, creativity, and productivity for customers and partners around the world.” (p. 78) |
| Blockbuster Inc. | “To be a global leader in rentable home entertainment by providing outstanding service, selection, convenience, and value.” (p. 99) |
| Coca-Cola | “We exist to create value for our share owners on a long-term basis. We refresh the world. We do this by developing superior beverage products that create value for our Company, our bottling partners and our customers.” (p. 132) |
| ConAgra | “Our mission is to increase stockholders’ wealth. Our job is to feed people better.” (p. 139) |
| Duke Power Company | “We produce and supply electricity, provide related products and services and pursue opportunities that complement our business. We will continually improve our products and services to better meet our customers’ needs and expectations, helping our customers, employees, owners, and communities to prosper.” (p. 169) |
| Hershey Foods Corporation | “Our mission is to be a focused food company in North America and selected international markets and a leader in every aspect of our business.” (p. 226) |
| Merck & Co., Inc. | “The Mission of Merck is to provide society with superior products and services—innovations and solutions that improve the quality of life and satisfy customer needs—to provide employees with meaningful work and advancement opportunities and investors with a superior rate of return.” (p. 300) |
| Pioneer Hi-Bred International, Inc. | “Our mission is to provide products and services which increase the efficiency and profitability of the world’s farmers. Our core business is the broad application of the science of genetics. We will ensure the growth of our core business and develop new opportunities which enhance the core business.” (p. 349) |
| Charles Schwab Corporation | “Our mission as a company is to serve the needs of investors. We have all kinds of customers…. We will focus our resources on the financial services that best meet our customers’ needs, whether they are transactional, informational, custodial services, or something new.” (p. 381) |
Source: These examples (and page numbers) are drawn from Abrams (1999), a useful resource for developers and critics of mission statements.
The strategy is a plan for fulfilling the mission and achieving the strategic objectives. To be strategic is to behave like a chess player, looking several moves ahead and assessing the possible countermoves of the opponent to determine the next move. The opposite of “strategic” is myopic, looking ahead only one move at a time. Strategic chess players beat myopic players. The Oxford English Dictionary defines strategy as “a plan for successful action based on the rationality and interdependence of the moves of the opposing participants.”1 Major corporations typically prepare detailed strategy documents each year for each business unit. These begin with an assessment of the external environment and the internal condition of the unit; this results in an inventory of the strengths, weaknesses, opportunities, and threats for the unit. Then the document outlines actions to be taken in the next year (and possibly also over a longer time horizon) to address weaknesses and threats, and exploit strengths and opportunities. Specific attention is given to sources of growth, whether organic (i.e., by internal investment) or inorganic (i.e., externally, using acquisitions, joint ventures, alliances, etc.). The plan might also address restructuring steps (e.g., divestitures, spin-offs, plant closings, etc.). Usually the plan culminates in a financial forecast for the next year that becomes the benchmark against which the performance of managers is evaluated. A corporate strategy is the aggregation of strategies for the various business units. Properly developed, strategy follows mission and objectives.
Planning Strategy Starts with SWOT
Firms approach the planning process in a variety of ways. For instance, a bottom-up approach drives the development of business unit strategy beginning with the front-line managers of the unit: The strategy is reviewed by senior management who critique and approve the unit strategy. A top-down approach uses a central staff to cast the corporate mission and objectives into strategies, which are then imposed on the business units; this is sometimes called a “command-and-control” approach to setting strategy. The process chosen usually reflects the complexity of the firm, its culture and history, and the relative talents of operating managers. Current conventional wisdom probably favors a bottom-up approach in the belief that people closest to the front line see the strategic field most clearly. Jack Welch, the former CEO of General Electric, was a leading proponent of the bottom-up approach to strategic planning.
The strategic planning process begins with an assessment of the business unit. This focuses both inward on the condition and resources of the unit, and outward on the shape of its environment and the unit’s position in the competitive field.
RESOURCES These may entail physical and financial assets, as well as talent and intellectual capital. Resources are like raw material; what matters is how the firm integrates resources to reach its objectives. Capabilities integrate resources to reach an objective. For instance, to produce custom-designed furniture, a firm must integrate across marketing, design, purchasing, manufacturing, and finance. Core competencies are strategic capabilities: those skills and activities that translate resources into special advantage for the firm. Home Depot, for instance, has a strategic capability in site location and store openings—design, construction, staffing,
