This document provides an overview of strategic management. It defines strategic management as formulating, implementing, and evaluating cross-functional decisions to achieve organizational objectives. The strategic management process consists of three stages: strategy formulation, strategy implementation, and strategy evaluation. Strategy formulation involves developing a vision, identifying opportunities/threats, determining strengths/weaknesses, and choosing strategies. Strategy implementation requires setting objectives, developing policies, and motivating employees to execute strategies. Strategy evaluation assesses strategy effectiveness and drives corrective actions.

1. 6 PART 1 • OVERVIEW OF STRATEGIC MANAGEMENT
Strategic management can be defined as the art and science o f
formulating, implementing,
and evaluating cross-functional decisions that enable an
organization to achieve its objec-
tives. As this definition implies, strategic management focuses
on integrating management,
m a r k e t i n g , finance/accounting, production/operations,
research and development, and
information systems to achieve organizational success. The term
strategic management in
this text is used synonymously w i t h the term strategic
plcmning. The latter term is more
often used i n the business w o r l d , whereas the former is
often used in academia. Sometimes
the term strategic management is used to refer to strategy
formulation, implementation, and
evaluation, w i t h strategic planning refemng only to strategy
formulation. The purpose o f
strategic management is to exploit and create new and different
opportunities for tomorrow;
long-range planning, in contrast, tries to optimize for
tomoiTOW the trends o f today.
The term strategic planning originated in the 1950s and was
very popular between the
mid-1960s and the mid-1970s. D u r i n g these years, strategic
planning was w i d e l y believed
to be the answer for all problems. A t the time, much o f
coiporate A m e r i c a was "obsessed"
w i t h strategic planning. F o l l o w i n g that "boom,"

2. however, strategic planning was cast aside
d u r i n g the 1980s as various p l a n n i n g models d i d not y
i e l d higher returns. The 1990s,
however, brought the revival o f strategic pl a nni ng, and the
process is w i d e l y practiced
today in the business w o r l d .
A strategic plan is, in essence, a company's game plan. Just as a
football team needs a
good game plan to have a chance for success, a company must
have a good strategic plan
to compete successfully. Profit margins a m o n g firms in most
industries have been so
reduced by the global economic recession that there is httle
room for eiTor in the overall
strategic plan. A strategic plan results f r o m tough managerial
choices among numerous
good alternatives, and i t signals c o m m i t m e n t to specific
markets, policies, procedures, and
operations i n l i e u o f other, "less desirable" courses o f
action.
The term strategic management is used at many colleges and
universities as the subti-
tle for the capstone course i n business administration. This
course integrates material f r o m
all business courses. The Strategic Management C l u b O nl i
ne at wwvv.strategyclub.com
offers many benefits for business p o l i c y and strategic
management students. Professor
Hansen at Stetson University provides a strategic management
slide show for this entire
text (www.stetson.edu/~rhansen/strategy).
Stages of Strategic Management
The strategic-management process consists o f three stages:

3. strategy formulation, strategy
implementation, and strategy evaluation. Strategy formulation
includes developing a vision
and mission, identify'ing an organization's external
opportunities and tlireats, determining
intemal strengths and weaknesses, establishing long-term
objectives, generating alternative
strategies, and choosing particular strategies to pursue.
Strategy-formulation issues include
deciding what new businesses to enter, what businesses to
abandon, how to allocate resources,
whether to expand operations or diversify, whether to enter
inteiTiational markets, whether to
merge or f o r m a j o i n t venture, and how to avoid a hostile
takeover.
Because no organization has u n l i m i t e d resources,
strategists must decide w h i c h alter-
native strategies w i l l benefit the f i r m most. Strategy-
formulation decisions c o m m i t an
organization to specific products, markets, resources, and
technologies over an extended
p e r i o d o f t i m e . Strategies determine l o n g - t e r m c o
m p e t i t i v e advantages. F o r better or
worse, strategic decisions have major multifuncUonal
consequences and enduring effects
on an organization. Top managers have the best perspective to
understand fully the r a m i f i -
cations o f strategy-formulation decisions; they have the
authority to c o m m i t the resources
necessaiy for implementation.
Strategy implementation requhes a f i r m to establish annual
objectives, devise p o l i -
cies, motivate employees, and allocate resources so that f o r m
u l a t e d strategies can be

4. executed. Strategy i m p l e m e n t a t i o n includes d e v e l o
p i n g a strategy-supportive c u l t u r e ,
creating an effecfive organizational structure, r e d i r e c t i n g
m a r k e t i n g efforts, preparing
budgets, developing and u t i l i z i n g i n f o r m a t i o n
systems, and l i n k i n g employee compensa-
t i o n to organizational performance.
CHAPTER 1 • THE NATURE OF STRATEGIC
MANAGEMENT
Strategy implementation often is called the "action stage" o f
strategic management.
Implementing strategy means mobilizing employees and
managers to put formulated strate-
gies into action. Often considered to be the most d i f f i c u l t
stage i n strategic management,
strategy implementadon requij^es personal discipline,
cominitment, and sacrifice. Successful
strategy implementation hinges upon managers' ability to
motivate employees, w h i c h is more
an art than a science. Strategies formulated but not implemented
serve no useful purpose.
Interpersonal skills are especially c r i t i c a l for successful
strategy i m p l e m e n t a t i o n .
Strategy-implementation activities affect all employees and
managers i n an organization.
Every division and department must decide on answers to
questions, such as "What must we
do to implement our part o f the organization's strategy?" and "
H o w best can we get the j o b
done?" The challenge o f implementation is to stimulate
managers and employees throughout

5. an organization to w o r k w i t h pride and enthusiasm toward
achieving stated objectives.
Strategy evaluation is the final stage in strategic management.
Managers desperately need
to know when particular strategies are not w o r k i n g weD;
strategy evaluation is the primary
means for obtaining this infomiation. A l l strategies are subject
to future modification because
external and intemal factors are constantly changing. Three
fundamental strategy-evaluation
activities are (1) reviewing external and intemal factors that are
the bases for current strategies,
(2) measuring perfomiance, and (3) taking corrective actions.
Strategy evaluadon is needed
because success today is no guaiantee o f success tomorrow!
Success always creates new and
different problems; complacent organizations experience
demise.
Strategy formulation, implementation, and evaluation activities
occur at three hierarchi-
cal levels in a large organization: coiporate, divisional or
strategic business unit, and func-
tional. B y fostering communication and interaction among
managers and employees across
hierarchical levels, strategic management helps a f i r m
function as a competitive team. M o s t
small busines.ses and some large businesses do not have
divisions or stiategic business units;
they have only the corporate and functional levels.
Nevertheless, managers and employees at
these two levels should be actively involved in strategic-
management activities.
Peter Drucker says the prime task o f strategic management is t

6. h i n k i n g through the
overall mission o f a business:
. . . that is. o f asking the question, "What is our business?"
This leads to the setting o f
objectives, the development o f strategies, and the m a k i n g o
f today's decisions for
tomoiTow's results. This clearly must be done by a part o f the
organization that can see
the enthe business; that can balance objectives and the needs o f
today against the needs
o f tomorrow; and that can allocate resources o f men and
money to key results.-
integrating intuition and Analysis
E d w a r d D e m i n g once said, " I n G o d we trust. A l l
others b r i n g data." T h e strategic-
management process can be described as an objective, l o g i c a
l , systematic approach f o r
m a k i n g major decisions in an organization. I t attempts to
organize qualitative and quan-
t i t a t i v e i n f o r m a t i o n in a way that a l l o w s
effective decisions to be made under co n d itio n s
o f uncertainty. Yet strategic management is not a pure science
that lends i t s e l f to a nice,
neat, one-two-three approach.
Based on past experiences, j u d g m e n t , and feelings, most
people recognize that
intuition is essential to m a k i n g good strategic decisions. I n
t u i t i o n is particularly useful for
m a k i n g decisions in situations o f great uncertainty or l i t t l
e precedent. I t is also h e l p f u l
when h i g h l y interrelated variables exist or when i t is
necessary to choose f r o m several
plausible alternatives. Some managers and owners o f

7. businesses profess to have extraordi-
nary abiUties for using i n t u i t i o n alone i n devising b r i l l
i a n t strategies. For example, W i l l
Durant, w h o organized G M , was described by A l f r e d
Sloan as "a man w h o w o u l d proceed
on a course o f action guided solely, as far as I c o u l d t e l l ,
by some i n t u i t i v e flash o f b r i l -
liance. H e never felt obUged to make an engineering hunt for
the facts. Yet at times, he was
astoundingly correct in his judgment."^ A l b e r t Einstein
acknowledged, the importance o f
i n t u i t i o n when he said, " I believe in i n t u i t i o n and
inspiration. A t times I feel certain that
I am right w h i l e not k n o w i n g the reason. Imagination is
more important than knowledge,
because knowledge is l i m i t e d , whereas imagination
embraces the entire world.'"*
CHAPTER 1 • THE NATURE OF STRATEGIC
MANAGEMENT
B B D O , Cadbufy Schweppes, General Motors, E l l i e Mae,
Cendant, Charles Schwab, Tyco,
Campbell Soup, M o r g a n Stanley, and Reed-Elsevier. This
new corporate officer tide repre-
sents recognition o f the growing importance o f strategic
planning in the business w o r l d . ' '
Strategists differ as much as organizations them.selves, and
these differences must be
considered in the formulation, implementation, and evaluation o
f strategies. Some strate-
gists w i l l not consider some types o f strategies because o f
their personal philosophies.

8. Strategists differ in their attitudes, values, ethics, w i l l i ngne
s s to take risks, concern for
social responsibihty, concern for profitabihty, concern for short-
run versus long-run aims,
and management style. The founder o f Hershey Foods, M i l t o
n Hershey, built the company
to manage an orphanage. F r o m corporate profits, Hershey
Foods today cares for over a
thousand boys and girls in its School for Oiphans.
Vision and Mission Statements
M a n y organizations today develop a vision statement that
answers the question " W h a t do
we want to become?" D e v e l o p i n g a v i s i o n statement is
often considered the first step
i n strategic planning, preceding even development o f a mission
statement. M a n y v i s i o n
statements are a single sentence. For example, the vision
statement o f Stokes Eye C l i n i c in
Florence, South Carolina, is "Our vision is to take care o f your
v i s i o n . "
Mission statements are "enduring statements o f purpose that
distinguish one business
from other similar firms. A mission statement identifies the
scope o f a f ir m 's operations in
product and market t e r m s . " ' - I t addresses the basic
question that faces a l l strategists:
" W h a t is our business?" A clear mission statement describes
the values and priorities o f an
organization. Developing a mission statement compels
strategists to think about the nature
and scope o f present operations and to assess the potential
attractiveness o f future markets
and activities. A mission statement broadly charts the future
direction o f an organization.

9. A mission statement is a constant reminder to its employees o f
w h y the organization exists
and what the founders envisioned when they put their fame and
fortune at risk to breathe
l i f e into their dreams. Here is an example o f a mission
statement for Barnes & N o b l e :
O u r mission is to operate the best specialty retail business i n
A m e r i c a , regardless
o f the product we sell. Because the product w e sell is books,
our aspirations must
be consistent w i t h the p r o m i s e and the ideals o f the v o l
u m e s w h i c h l i n e our
shelves. To say that our mission exists independent o f the
product we sell is to
demean the importance and the d i s t i n c t i o n o f being
booksellers. A s booksellers we
are determined to be the very best i n our business, regardless o
f the size, pedigree,
or inclinations o f our competitors. We w i l l continue to b r i n
g our industry nuances
o f style and approaches to b o o k s e l l i n g w h i c h are
consistent w i t h our e v o l v i n g
aspirations. A b o v e a l l , we expect to be a credit to the c o m
m u n i t i e s we serve, a
valuable resource to our customers, and a place where our
dedicated booksellers
can grow and prosper. T o w a r d tiiis end we w i l l not o n l y
listen to our customers
and booksellers but embrace the idea that the C o m p a n y is at
their service.
(www.missionstatements.com)
External opportunities and external tlireats refer to economic,
social, c u l t u r a l , demo-
graphic, e n v i r o n m e n t a l , p o l i t i c a l , legal,

10. governmental, t e c h n o l o g i c a l , and c o m p e t i t i v e
trends and events that c o u l d significantly benefit or harm an
organization i n the futtire.
Opportunities and threats are largely beyond the control o f a
single organization—thus the
w o r d external. I n a global economic recession, a few
opportunities and threats that face
many firms are listed here:
• A v a i l a b i l i t y o f capital can no longer be taken for
granted.
• Consumers expect green operations and products.
• M a r k e t i n g has m o v i n g rapidly to the Internet.
• Consumers must see value in all that they consume.
• G l o b a l markets offer the highest g r o w t h i n revenues.
12 PARTI • OVERVIEW OF STRATEGIC MANAGEMENT
• A s the price of oil has collapsed, oil rich countries arc
focused on supporting their
o w n economies, rather than seeking out investments in other
countries.
• Too much debt can ciTish even the best firms.
• LayofTs are rampant ainong many firrns as revenues and
profits fail and credit
sources dry up,
• The housing market is depressed.
• Demand for health services does not change much in a
recession. For example.
Almost Faim}y Inc., a Louisville, Kentucky, p r o v i d e r of
home musing care, more

11. than doubled its stock price i n 2008 to $45.
• Dramatic slowdowns i n consumer spending are apparent i n v
i r t u a l l y all sectors,
except some discount retailers and restaurants.
• Unvetg.vwg, couumes' ecoaomves could manage to grow 5
percent in 2009, but that is
• U . S . unemployment rates continue to rise to 10 percent on
average.
• Borrowers are faced w i t h much bigger collateral
requirements than in years past.
• Equity lines o f credit often now are not being extended.
• F i r m s that have cash or access to credit have a competidve
advantage over debt-laden
firms.
• Discretionary spending has fallen dramatically; consumers buy
only essential items;
this has crippled many luxury and recreational businesses such
as boating and cycling.
• The stock market crash o f 2008 left senior cidzens w i t h
retirement worries, so millions
o f people cut back on spending to the bare essentials.
• The double w h a m m y o f f a l l i n g demand and intense
price competition is plaguing
most firms, especially those w i t h high fixed costs.
• The business w o r l d has moved from a credit-based economy
to a cash-based economy.
• There is reduced capital spending i n response to reduced
consumer spending.

12. The types o f changes mentioned above are creating a different
type o f consumer and
consequently a need for different types o f products, services,
and strategies. M a n y compa-
nies in many industries face the severe external threat o f online
sales capturing increasing
market share i n their industry.
Other opportunities and threats may include the passage o f a
law, the introduction o f
a new product by a competitor, a national catastrophe, or the
declining value o f the dollar.
A competitor's strength could be a threat. Unrest i n the M i d d
l e East, rising energy costs,
or the war against teiTorism could represent an o p p o i t u n i t
y or a threat.
A basic tenet o f strategic management is that firms need to
formulate strategies to
take advantage o f external opportunities and to avoid or reduce
the impact o f external
threats. For this reason, i d e n t i f y i n g , m o n i t o r i n g ,
and evaluating external opportunities and
threats are essential for success. T h i s process o f conducting
research and gathering and
assimilating external i n f o r m a t i o n is sometimes called
environmental scanning or industry
analysis. L o b b y i n g is one a c t i v i t y that some
organizations u t i l i z e to influence external
opportunities and threats.
SfBiieE'Eiiai! SiimmiMs and Ifeaks'sssses
Internal strengths and internal weaknesses are an organization's
controllable activities that
are p e r f o r m e d especially w e l l or p o o r ly . T h e y arise
i n the management, m a r k e t i n g ,

13. finance/accounting, production/operations, research and
development, and management
i n f o r m a t i o n systems activities o f a business. I d e n t i f
y i n g and evaluating organizational
strengths and weaknesses in the functional areas o f a business
is an essential strategic-
management activity. Organizations strive to pursue strategies
that capitalize on internal
strengths and eliminate internal weaknesses.
Strengths and weaknesses are determined relative to
competitors. Relative deficiency
or superiority is important i n f o r m a t i o n . Also, strengths
and weaknesses can be determined
by elements o f being rather than performance. For example, a
strength may involve owner-
ship o f natural resources or a historic reputation for quality.
Strengths and weaknesses may
be determined relative to a firm's o w n objectives. For
example, high levels o f inventory
turnover may not be a strength to a firm that seeks never to
stock-out.
CHAPTER 1 • THE NATURE OF STRATEGIC
MANAGEMENT 13
I n t e m a l factors can be deteimined in a number o f ways, i n
c l u d i n g c o m p u t i n g ratios,
measuring performance, and c o m p a r i n g to past periods and
industry averages. Various
types o f surveys also can be developed and administered to
examine i n t e m a l factors such
as employee morale, production efficiency, advertising
effectiveness, and customer loyalty.

14. Objectives can be defined as specific results that an
organization seeics to achieve in pursuing
its basic mission. Long-term means more than one year.
Objectives are essential for organiza-
tional success because they state direction; aid in evaluation;
create synergy; reveal priorities;
focus coordination; and provide a basis for effective planning,
organizing, motivating, and
controlling activities. Objectives should be challenging,
measurable, consistent, reasonable,
and clear. I n a i n u l t i d i m e n s i o n a l f i r m , objectives
should be established for the overall
company and for each division.
Strategies are the means by w h i c h long-term objectives w i l
l be achieved. Business strate-
gies may include geographic expansion, diversification,
acquisition, product development,
market penetration, retrenchment, divestiture, l i q u i d a t i o n
, and j o i n t ventures. Strategies
cuirently being pursued by some companies are described in
Table 1-1.
Strategies are potential actions that require top management
decisions and large
amounts o f the firm's resources. I n addition, strategies affect
an organization's long-term
prosperity, t y p i c a l l y for at least five years, and thus are
future-oriented. Strategies have
m u l t i f u n c t i o n a l or m u l t i d i v i s i o n a l
consequences and require consideration o f both the
external ajid internal factors facing the f i r m .
Annual objectives are short-term milestones that organizations
must achieve to reach l o n g -

15. term objectives. L i k e long-tenn objectives, annual objectives
should be measurable, quanti-
tative, challenging, realistic, consistent, and prioritized. They
should be established at the
Sample Strategies in Action in 2009
Best Buy
As soon as Best Buy Company became victorious over longtime
archrival Circuit City Stores,
Best Buy ran head on into a much larger, formidable
competitor: Wal-Mart Stores. Based in
Richfield, Minnesota, and having 3,900 stores worldwide. Best
Buy reported a 20 percent
decline in March 2009 earnings as its new rival Wal-Mart
gained thousands of the old Circuit
City customers. But Best Buy now meets Wal-Mart's prices on
electronics items and provides
great one-on-one customer service with its blue-shirted
employees. Best Buy remains well
ahead of Wal-Majt in U.S. electronics sales, but Wal-Mart is
gaining stiength.
Levi Strauss
San Francisco-based Levi Strauss added 30 new stores and
acquired 72 others during the second
quarter of 2009. Known worldwide for its jeans, Levi Strauss is
expanding and entrenching world-
wide while other retailers are falleiing in the ailing economy.
For that quarter, Levi's revenues in
the Americas were up 8 percent to $518 million, although its
Europe and Asia/Pacific revenues
declined 17 percent and 13 percent respectively. Levi's CEO
John Anderson says sHm fit and skinny

16. jeans are selling best; and the two most popular colors today are
very dark and the disuessed look.
New York Times Company
New York Times Company's CEO, Janet Robinson, says her
company is selling off assets
and investing heavily in Internet technology in order to
convince advertisers that the news-
paper is getting ahead of technological changes rapidly eroding
the newspaper business.
Ms. Robinson is considering plans to begin charging customers
for access to the newspaper's
online content, because online advertising revenues are not
sufficient to support the business.
The 160-year-old New York Times Company's advertising
revenues fell 30 percent in the
second quarter of 2009.
CHAPTER 2 • THE BUSINESS VISION AND MISSION 47
formulation, implementation, and evaluation activities. Thus,
the process o f developing a
vision and tnission statement represents a great opportunity for
strategists to obtain needed
support from all managers i n the f i r m .
D u r i n g the process o f d e v e l o p i n g v i s i o n and
mission statements, some organiza-
tions use discussion groups o f managers to develop and m o d i
f y e x i s t i n g statements.
Some o r g a n i z a t i o n s hire an o u t s i d e c o n s u l t a n t
or f a c i l i t a t o r to manage the process
and help draft the language. Sometimes an outside person w i t

17. h expertise i n d e v e l o p i n g
such statements, w h o has unbiased v i e w s , can manage the
process more e f f e c t i v e l y
than an i n t e r n a l g r o u p or c o m m i t t e e o f managers.
D e c i s i o n s on h o w best to c o m -
m u n i c a t e the v i s i o n and m i s s i o n to a l l managers, e
m p l o y e e s , and e x t e r n a l c o n -
stituencies o f an organization are needed when the documents
are in final f o r m . Some
organizations even develop a videotape to explain the
statements, and how they were
developed.
A n article by C a m p b e l l and Yeung emphasizes that the
process o f d e v e l o p i n g a
mission statement should create an "'emotional b o n d " and
"sense o f mission" between the
organization and its employees.^ C o m m i t m e n t to a
company's strategy and intellectual
agreement on the strategies to be pursued do not necessarily
translate into an emotional
bond; hence, strategies that have been f o r m u l a t e d may not
be i m p l e m e n t e d . These
researchers stress that an etnotional bond comes when an
individual personally identifies
w i t h the underlying values and behavior of a f i r m , thus
turning intellectual agreement and
c o m m i t m e n t to strategy i n t o a sense o f mission.
Campbell and Yeung also differentiate
between the terms vision and mission, saying that vision is "a
possible and desirable future
state o f an organization" that includes specific goals, whereas
mission is more associated
w i t h behavior and the present.
Importance (Benefits) of Vision and Mission

18. Statements
The i m p o r t a n c e ( b e n e f i t s ) o f v i s i o n and m i s s i
o n statements to e f f e c t i v e strategic
management is w e l l documented in the literatui-e, although
research results are m i x e d .
R a r i c k and V i t t o n . f o u n d that f i r m s w i t h a f o r m
a l i z e d mission statement have t w i c e the
average return on shareholders' equity than those firms w i t h o
u t a f o r m a l i z e d m i s s i o n
statement have; Bart and Baetz found a p o s i t i v e r e l a t i o
n s h i p between mission state-
ments and organizational performance; BusinessWeek reports
that f i r m s using mission
statements have a 30 percent h i g h e r return on certain f i n a
n c i a l measures than those
w i t h o u t such statements; however, some studies have found
that having a mission state-
ment does not d i r e c t l y contribute p o s i t i v e l y to f i n a
n c i a l performance.*- The extent o f
manager and employee i n v o l v e m e n t i n developing v i s i
o n and mission statements can
make a difference in business success. T h i s chapter provides
guidelines for developing
these i m p o r t a n t d o c u m e n t s . I n actual p r a c t i c e ,
w i d e v a r i a t i o n s e x i s t i n the nature,
c o m p o s i t i o n , and use o f both v i s i o n and mission
statements. K i n g and Cleland r e c o m -
mend that organizations carefully develop a w r i t t e n mission
statement i n order to reap
the f o l l o w i n g benefits:
1. To ensure unanimity o f purpose w i t h i n 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 w i t h the

19. organization's purpose
and direction, and to deter those w h o cannot f r o m
participating further in the orga-
nization's activities
5. To facilitate the translation o f objectives into a w o r k
structtire i n v o l v i n g the assign-
ment o f tasks to responsible elements w i t h i n the
organization
6. To specify organizational purposes and then to translate these
purposes into objec-
tives in such a way that cost, time, and performance parameters
can be assessed and
controlled.^
48 PART 2 • STRATEGY FORMULATION
Reuben M a r k , former C E O o f Colgate, maintains that a
clear mission increasingly
must make sense internationally. M a r k ' s thoughts on v i s i o
n are as f o l l o w s :
W h e n it comes to r a l l y i n g everyone to the coiporate
banner, it's essential to push one
vision globally rather than t r y i n g to drive home different
messages in different c u l -
tures. The t r i c k is to keep the v i s i o n simple but elevated:
"We make the w o r l d ' s
fastest computers" or "Telephone sei^vice for everyone." You're
never going to get
anyone to charge the machine guns only for financial
objectives. I t ' s got to be some-

20. t h i n g that makes people feel better, feel a part o f
something.^
A Resolution of Diverfssit Views
Another benefit o f developing a comprehensive mission
statement is that divergent views
among managers can be revealed and resolved through the
process. The question " W h a t is
our business?" can create controversy. R a i s i n g the question
often reveals differences
among strategists i n the organization. I n d iv id u als w h o
have w o r k e d together for a l o n g
time and w h o think they know each other suddenly may reahze
that they are in fundamen-
tal disagreement. For example, i n a college or university,
divergent views regarding the
r e l a t i v e imp o r tan ce o f teaching, research, and service
often are expressed d u r i n g the
mission statement development process. N e g o t i a t i o n ,
compromise, and eventual agree-
ment on important issues are needed before people can focus on
more specific strategy
formulation activities.
" W h a t is our mission?" is a genuine decision; and a genuine
decision must be based
on divergent views to have a chance to be a right and effective
decision. Developing
a business mission is always a choice between alternatives, each
o f w h i c h rests on
different assumptions regarding the reality o f the business and
its environment. I t is
always a h i g h - r i s k d ecisio n . A change in mission always
leads to changes i n
objectives, strategies, organization, and behavior. The mission
decision is far too

21. important to be made by acclaination. Developing a business
mission is a b i g step
toward management effectiveness. Hidden or half-understood
disagreements on the
definition o f a business mission underlie many o f the
personality problems, c o m m u -
n i c a t i o n problems, and i r r i t a t i o n s that tend to d i v i
d e a top-management g r o u p .
Establishing a mission should never be made on plausibility
alone, should never be
made fast, and should never be made painlessly.^
Considerable disagreement among an o r g an izatio n 's
strategists over v i s i o n and
mission statements can cause trouble i f not resolved. For
example, uaresolved disagree-
ment over the business mission was one o f the reasons for W. t
. Grant's bankruptcy and
eventual l i q u i d a t i o n . A s one executive reported:
There was a lot o f dissension w i t h i n the company whether
we should go the K m a r t
route or go after the M o n t g o m e r y Ward and JCPenney
position. E d Staley and L o u
Lustenberger ( t w o top executives) were at loggerheads over
the issue, w i t h the
upshot being we took a position between the t w o and that
consequently stood for
nothing."^
Too of ten , strategists develop v i s i o n and business mission
statements o n l y when
the o r g a n i z a t i o n is in trouble. O f course, i t is needed
then. D e v e l o p i n g and c o m m u n i -
c a t i n g a clear m i s s i o n d u r i n g t r o u b l e d times
indeed may have spectacular results and

22. even may reverse d e c l i n e . H o w e v e r , to w a i t u n t i l
an o r g a n i z a t i o n is in t r o u b l e t o
develop a v i s i o n and m i s s i o n statement is a g a m b l e
that characterizes i r r e s p o n s i b l e
management. A c c o r d i n g to Dr u ck er , the most i m p o r t
a n t t i m e to ask seriously, " W h a t
do we wan t to become?" and " W h a t is our business?" is
when a c o m p a n y has been
successful:
Success always obsoletes the very behavior that achieved i t ,
always creates new real-
ities, and always creates new and different problems. O n l y the
fairy tale story ends,
"They l i v e d happily ever after." I t is never popular to argue
w i t h success or to rock