Ben& Jerry | Course Paper

CORPORATE MISSION STATEMENT AND BUSINESS

PERFORMANCE: THROUGH THE PRISM OF

MACEDONIAN COMPANIES

Tamara Jovanov Marjanova, (PhD)

tamara.jovanov@ugd.edu.mk

Teaching Assistant, University “Goce Delcev” – Shtip, Faculty of Economics,

Republic of Macedonia

Elenica Sofijanova, (PhD)

elenica.sofijanova@ugd.edu.mk

Professor, University “Goce Delcev” – Shtip, Faculty of Economics,

Republic of Macedonia

Abstract

This paper analyses the corporate mission statement as an essential step in

the strategic planning process, based on its impact on companies’ business

performance, i.e. market share. We underline the significance of early employment

of mission statement, because it is a technique through which the strategic intention

of a company is defined and sustained. The study addresses two main research

aspects: 1. the key components and terms by which a company can create a mission

statement, and 2. the connection between detailed, highly comprehensive mission

statement and market share. The methodology includes quantitative and qualitative

research that explored the way in which 38% of the registered companies in the

confectionery industry in Macedonia create their mission statements. Primary data

was derived from questionnaires and semi-structured interviews and secondary data

– from books, journals and academic articles. Data was analyzed with IBM

Statistical Package for Social Sciences (SPSS) 19. Results suggest that highly

comprehensive mission statement has significant correlation and directly

influences companies’ market share, i.e. performance. The analysis has also shown

that a model of key components and terms of a mission statement can be used as a

guide in the process of mission statement creation. The limitations of the paper arise

from sample’s size and the (one) chosen industry, but the findings are useful to

entrepreneurs and managers, since they provide a more accurate perspective of the

significance of mission statement and the way that it affects business.

Key words: Mission statement, business performance, market share, key

components and terms.

1. Introduction

At the beginning of the business operation, top management must define

the culture and strategic intent as key aspects in the operation of an enterprise.

The aspirations of the company should have a strategic intent, expressed through

statements about vision, mission and organizational goals. The mission of the

company is often presented in the form of so-called mission statement, which

projects a certain image of the underlying intent of the existence of the company.

The mission is broad description of the intention of the company and the type of

activities it plans to undertake (Campbell, 1997). In fact, the mission statement

defines the business that the company is in, its goals and approach to achieving

those goals (Rigby, 2011).

The motivation for development of a mission statement may arise from

the objectives that are expected to be accomplished with it (Campbell and Yeung,

1991): motivation of employees to achieve higher performance, direction and

consistency in the allocation of resources, a balance between the conflicting

interests of different groups of stakeholders. The mission statement can also

contribute with its impact outside the enterprise (Rigby, 2011): closer ties and

better communication with customers and suppliers, public relations, external

support.

Comprehensive mission statement can contribute significantly to high

performance, hence, it provides numerous benefits that usually translate into high

performance, such as: 1. explanation of the purpose of the organization, 2.

identification of standards for allocation of resources, 3. focus and specification

of organizational purposes into objectives and goals, 4. identification of core

strategic competence and market position, 5. setting priorities, values and

business philosophy, etc. However, regardless of the rationality of the process, it

is proposed that the basic purpose and motivation for the development of the

mission statement should be to enhance the performance of the company (Bart

and Tabone, 1998).

1.1. Key Components and Terms of a Mission Statement

Typically, the mission statement is prepared by the owner and/or the

senior management of the company. Thus, it is important to know that besides

the elements that are positively correlated with the performance of the company

(adopted values, social responsibility), there are elements that are found to be

negatively correlated with performance, such as the presence of financial

statement purposes (Bart and Baetz, 1998). For that reason, the process of

development of a mission statement should be approached with high attention and

managers should be very careful about the certain components they incorporate

into the statement. The way to identify the basic components and terms that

should be included in a mission statement is to create a model consisted of the

key components given by Campbell (1996) and the associated terms provided by

Stevens (1994) that are positively connected to business performance (Table 3).

Table 1. Мission statement model of key components and terms

Components of the mission

statement by the Ashridge Mission

Model (Campbell, 1996)

Key terms in the mission statement

(Stevens, 1994)

Intention

• Why is there a company?

• What is the basic reason for

existence?

• For whose benefit does the company

exists?

Consumers/clients/customers

Investors/shareholders/owners

Community/society

Employees/colleagues

Management

Suppliers

Strategy

• How will the company pursue its

strategic goals?

• The competitive position and key

competencies?

• Identification of the commercial

logic for the business.

Fiscal conservatism

Market share

Financial measures (sales, profit, return)

Domination and competition

Long perspective

Global perspective

Research and development (R&D)

Technology

Values

• What does the company believe in?

• Setting priorities and core beliefs,

aspirations, philosophy.

• Determining of the moral logic of

business.

Awareness of cost (sense of the value of the

product/service versus price)

Social/civic responsibility

Commitment/dedication

Welfare of employees/quality of life

Learning/training/development

Standards of conduct

• How does the company act in the

community?

• Policies and pattern of behavior that

support core competencies and value

system

Ethics/morality/honesty/fair treatment

Professionalism

Aggression/focus on improving

Adaptation/reaction

Innovation/creation

Authorization (transfer of responsibility)

According to this model, the management of the mission statement is a

continuous process that requires constant review and change. With its use, the

present deficiencies in the existing mission can be perceived, and/or these can be

avoided in the formulation of the new mission statement (Campbell, 1996). For

example:

 Are the values of the management/owner compatible with the values of

employees (The observed differences can contribute to further

development of corporate culture. Such differences may easily be

perceived through interviews, group discussions and/or questionnaires,

after which the management must face the need to change the mission

statement or change and recruit employees with values compatible with

the values defined in the existing mission statement);

 Are the values in the mission in conflict with the values of the

management and/or employees;

 Are the strategy and the values mutually supporting and reinforcing or

conflicting, which can be observed through the adopted standards of

conduct (If clear standards of conduct can be identified in the mission

statement, this indicates that there is a close link between strategy and

values).

This model can be used as an analytical framework by which managers

can shape, modify or improve the mission statement of the company.

2. Literature Review and Hypotheses

The vision and mission are considered to be of great importance for the

efficient and effective operation of the enterprise. Many research papers identify

the mission statement as a tool for strategic planning and starting point in building

enterprise’s identity. It is also associated with business performance and survival

(Leuthesser and Kohli, 1997).

According to Medley (1992) and Wilson (1992), the existence of a

detailed mission statement can lead to a 50% increase in the effectiveness of the

company. Research shows that companies with a detailed, highly comprehensive

mission statement have an average return on investment of 26.2%, while

companies with low comprehensive mission statement have an average return of