1

School of Leisure and Sports Management

UNIT L5430

Dissertation draft

Do the successful Hospitality establishments have a clear Mission/ Vision Statements also?

TAHIR SUFI & HOWARD LYONS

in partial fulfilment of the requirement for the degree of

Master of Science in Hospitality Management.

TAHIR SUFI PRINCIPAL. CHANDIGARH COLLEGE OF HOTEL MANAGEMENT, CHANDIGARHG GROUP OF INSITUTES (CGC) LANDRAN-DISTRICT MOHALI PUNJAB-140307 INDIA tahir.sufi@gmail.com

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TABLE OF CONTENTS

1.0 INTRODUCTION Page No:

1.1 Relevance of the dissertation 1.2 The aims and objectives of the dissertation.

1.3 Structure of the dissertation ______________________________________________________________ 2.0 HOSPITALITY INDUSTRY: AN OVERVIEW OF STRUCTURE AND

STRATEGY

2.1 Aims and Objectives 2.2 Traditional versus modern view of the Hospitality Management 2.3 Industry Structure 2.4 Industry Expansion and the need for the Strategy 2.5 Business format and complexities. 2.6 Globalisation and growth strategies 2.7 Conclusion

______________________________________________________________

3.0 MISSION STATEMENTS: A LITREATURE REVIEW

. 3.1 Organizational Purpose and Business Objectives 3.2 Strategy Formulation and Mission Statements 3.3 Organizational Vision

3.4 Mission statements and what they stand for. 3.5 The Impact and Purpose Of Mission Statements

3.6 The Components of Mission Statements 3.7 How Mission Statements influence Quality and innovation 3.8 Performance Evaluation 3.9 Summary and conclusion.

______________________________________________________________ Tahir Sufi & Howard Lyons (2001), Do the Successful Hospitality Establishments have clear Mission/Vision Statements also?

3

Sheffield Hallam University School of Sports and Leisure Management

4.0 RESEARCH METHODOLOGY 4.1 Formulation of research problem

4.2 Data collection/source of information 4.3 Research design/selection 4.4 Content analysis: Definition and scope

______________________________________________________________ 5.0 DATA ANALYSIS

5.1 Aims and objectives. 5.2 Correlation 5.3 SPSS analysis scatter plot graph. 5.4 SPSS analysis correlation analysis.

______________________________________________________________

6.0 RESULTS AND DISCUSSION

6.1 Aims and objectives. 6.2 Scatter plot graph 6.3 Correlation analysis 6.4 Content analysis 6.5 Components and performance indicators. 6.6 Constraints of Dissertation and further research suggestions.

______________________________________________________________

7.0 BIBLIOGRAPHY ______________________________________________________________ 8.0 APPENDIX

7.1 List of top 50 Hospitality Establishments 7.2: List of Hospitality Mission/Vision statements.

7.0 LIST OF THE FIGURES Fig 1: Strategy as the effort to fulfil organizational purpose, Miller and Dess (1996). Fig 2: Strategic Management model as proposed by Fred (1993). Fig 3: Three Generic Strategies, Porter (1980).

Fig4: Ashridge Mission Model, Campbell and Tawadey (1992).

Tahir Sufi & Howard Lyons (2001), Do the Successful Hospitality Establishments have clear Mission/Vision Statements also?

4

Sheffield Hallam University School of Sports and Leisure Management

Fig5: Core ideology, purpose and values equation, Collin and Porras (1996).Fig6:

Scatter Plot graph of Mission statement and four variables.

9.0 LIST OF THE TABLES

Table 1: Five most frequently discussed themes, (Total Research 1999)

Table 2: Mission Statement Components.

Table 3: Examples of evaluation of the Mission Statements.

Table4: Mission Statement Component Score and ROE.

Table5: Correlation analysis of Mission statement score and performance indicators.

______________________________________________________________

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INTRODUCTION

Mission Statements are an inseparable part of the corporate strategies as per the strategic management literature. Over three decades of work in this field has led to some interesting conclusions. Clearly, enough evidence has been produced about the Mission Statements having a positive impact on the organizational performance .At the same time, however, there is a lot of cynicism whether they bring about any glad tidings to the businesses and are even regarded as “one-off “ activities in the corporate cartoon literature (Dilbert Principle). The study of Mission Statements started in early seventies when Peter Ducker, referred them as a precursor to “clear and realistic business objectives”. Since then, the study of Mission Statements continued in the strategic management literature while the researchers used whole range of terms to describe them. These terms include, a vision thing, smoke and mirrors (Barktus 2000), building blocks, invisible hand (Strong 97), motherhood statements, the Hippocratic oath, lantern, anchor, conscience, office manifesto, company slogan and motto (Fletcher 2001). They have been even referred to “as thick as autumn leaves those bestrew the brooks of the organizational land (with apologies to Milton-paradise lost)” and have been best described as a beacon shining from a faraway hill side at night that guides the travellers to their destination (Richman and Wright 1994). Enough efforts have been made to explain the real nature and purpose of the mission statement and how they contribute to the positive impact on the organizational success. The decades of the research and theory has led the mission statements to hold a permanent position in the corporate strategic planning process. The research work that has been done in this field include how Mission Statements influence the Organizational performance, the content analysis of the Mission statements of the Industrial and service sectors, justification of mission statements and what makes a good mission statement etc. The results of these investigations led to some of the interesting findings. These findings include that the mission statements have an impact on the financial performance of the companies and impact on certain operational aspects as well. The study and research of the strategic management in the Hospitality Industry has been extensively covering the ground since the last decade, however the study and analysis of the mission statements was left untouched. This dissertation is relevant as it

aims to establish the framework for analysing the Hospitality Industry mission statements in

the light of the most recent academic literature on the subject. This work can be used as

foundation for the subsequent research and improved upon with the fresh ideas to over come

its shortcomings.

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1.1 AIMS AND OBJECTIVES OF THE RESEARCH

The dissertation aims at evaluating the mission/statements of the best performing Hospitality establishments .The study shall involve establishing the Criteria for evaluating the mission statements using the academic literature. Using the content analysis as the research methodology, the mission statements shall be analysed to study the most popular themes. The final aim is to identify the components and themes of the mission statements, which are essential to have a good mission statement, especially for Hospitality business. The aims and objectives thus set out for this dissertation are summarised as below:

1.To study whether the best performing Hospitality companies have clear

mission/vision statements as well.

2.To set up a criteria for evaluating the mission statements.

3.To determine the most popular themes of the mission statements of the best

performing Hospitality companies.

4. To determine the themes and components that the good mission statement should

carry in order to make one especially for a Hospitality business.

1.2 STRUCTURE OF THE DISSERTATION: The dissertation is divided into three main sections, the literature review, the research methodology and finally the results and discussions. This section is divided into the two chapters (2&3). Chapter two outlines briefly the structure and strategy of the hospitality Industry and explains the complexity and the unique nature of the Industry. Following this chapter, the critical review of the literature is presented in order to develop the theoretical rationale of the research problem and to identify what research has been done on the subject till date. Apart from it, the literature review discusses the framework, which is used to evaluate the mission statements. Following the literature review, chapter 4 explains the four steps of the research procedure used to investigating into the research problem. These steps include the formulation of the research problem, Data Collection/ source of Information, Research design/selection and finally the research methods used. Also, the framework for evaluation of the mission statements is presented in this chapter that was developed using the literature review. Chapter 5 discusses the findings and conclusion of the comparative study undertaken to seek the answer to the research problem. The results from the SPSS analysis are discussed in the first part and the results from content analysis in the other. Also, this section provides the answers to the aims and objectives set for the dissertation.

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CHAPTER-2

HOSPITALITY INDUSTRY: AN OVERVIEW OF STRATEGY AND STRUCTURE

2.1 AIMS AND OBJECTIVES:

The study of the strategy and structure is imperative for understanding the complex

setting of the fragmented Hospitality Industry. Over the last decade, considerable

changes have taken place in this Industry. There has been transition in the image of

the Industry from being old fashioned to modern in outlook. The aim of this chapter is

to have an understanding of how far the strategic management has influenced this

industry and whether it has an important role to play as well, like in the other

Industries.

Also this chapter aims to justify the research methodology of the dissertation on

account of the complexities, which may arise during the analysis of the Mission

statements of the Hospitality establishments. These complexities arise because of

the Fragmented nature of this Industry and the subsequent strategy of the Hospitality

establishments for a bigger market share, growth and entering foreign markets.

These strategies include Strategic alliances, Consortium, Franchising, Management

contracts, Multiple branding etc. These strategies represent the concern for the

growth and survival of the business units. The corporate Mission statements also

share these concerns. This chapter provides a clear picture of the Hospitality Industry

in terms of the nature of the Industry, competitive advantage, threats, opportunities

and challenges.

The business format of the International Hospitality Industry is diverse. This diversity

includes Public limited companies, privately owned and Family run business

establishments. The performance analysis of these establishments on the basis of

some common indicator poses a challenge to the researcher. Thus the research

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methods used to generalise some findings about the Industry, needs to be carefully

designed for the purpose.

2.2 TRADITIONAL VERSUS MODERN VIEW OF HOSPITALITY:

Hospitality has been referred to be an immediate paradox between generosity and

the market place. Lashley (1999) explained this concept by giving the example of

Harvester Restaurant where the instruction to the front of the house personnel is “

Treat the customer as though they were guests in your own home”. The key to

successful hospitality business thus is to make the giving seem like an act of real

generosity rather than a formulaic „give away‟.

Various definitions of Hospitality have been put forward from the Collins Dictionary to

contemporary hospitality ones. The Collins Dictionary simply defines Hospitality as

“kindness in welcoming strangers or guests”. Brotheron (1999) offers a definition to

include a contemporaneous human exchange, which is voluntarily entered into, and

designed to enhance the mutual well-being of the parties concerned through the

provision of accommodation and food or drink”. Hospitality Industry covers many

kinds of services such as accommodation (Hotels& other form of Lodging like motels,

resorts etc), Catering (Airline, Industrial etc), Restaurants (fast food, speciality etc)

and pubs, cafes etc.

However the modernization and technological innovation of the present times have

changed the whole view of this industry, which has influenced it to follow the pattern

of other businesses. Barge (1998) refers to this view as outdated that Hospitality is

customer –host relationship evidenced in „mine host‟ and coupled with a

management focus on monitoring costs. He explained that the new owners of the

Hospitality companies have a strategic view of the business, understanding that the

value requires operations ability and investment acumen.

Creating the competitive advantage is one of the most important research topics in

the Strategic Management field. Many writers have emphasised the importance of

the internal characteristics of the firm and its external factors in sustaining its

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competitive advantage. Moingoen et al (1998) argued that creating and sustaining

the competitive advantage must be firmly based on the dynamics of how the

firm‟s resources are acquired and managed. The resource based view leads to

the relationship between the organizational learning and competitive advantage,

which requires the greater degree of the integration between the strategy and

structure.

2.3 INDUSTRY STRUCTURE:

The success and survival of the Hospitality unit is extremely dependant on the

structure of the Industry within which this unit competes. Hospitality Industry is a

Fragmented industry as per Porters Industry analysis. Porter (1982) defined

Fragmented Industry as one where companies compete for relatively small market

share and no company has a big market share. He recommended that the limitations

of the Fragmented Industry could be over come by cost leadership or differentiation

strategy. For example, Hunger (1999), explained that until Pizza Hut used advertising

to differentiate itself from its local competitors, the Pizza fast food business primarily

comprised locally owned Pizza parlors, each offering its own distinctive product and

services. In comparison, Dominos used the cost leadership to achieve the market

share in US.

Fragmentation is overcome as the industry matures and the industry tends to

become more consolidated, and therefore dominated by a small number of large

companies. The strategic alliances and hotel consortium in case of the Hotel Industry

represents this consolidated structure. The structure of an Industry, which comprises

of five competitive forces determine the profitability of industry. These five forces are

existing competitors, threat of the new entrants, suppliers, buyers and substitutes

(Knowles 1994).

The key sectors of the Hospitality Industry are becoming more concentrated.

Morrison and Thomas (1999) found that the evidence of growth of multiples in fast

food and accommodation over recent decades is incontrovertible. They discussed

that the domination of the market share by these multiples at the cost of the small

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firms, and referred it as questionable, on the basis of unavailability of accurate

statistics of the Industry structure.

2.4 INDUSTRY EXPANSION AND THE NEED FOR STRATEGY:

Ingram (1999) explained that after Second World War, the practice of Hospitality

became professional and wide spread so it sought to acquire a knowledge base

through which it could improve its operations and develop the managers of the future.

Mintzberg (1994) proposed the softer, contingency approach to Strategic planning,

which was well received by the researchers of the Hospitality Management.

Commenting on the contribution Strategic Management can make in Hospitality

Industry and the reason for being used in this industry, Webster and Hudson (1992)

explained that it is important for this Industry as much as it is important on the other

industries as well. While reaching a stage in the life cycle where decisions of a

strategic nature become increasingly important can be one of the reason for the

Hospitality Industry to accept the Strategic Management.

The Hospitality industry by nature is labour intensive, spatially disintegrated and

fragmented, operating in a complex and dynamic environment, predominantly

composed of small independent enterprises. To make the sense of these

characteristics, and to maintain the equilibrium between stability and instability,

Edgar and Nisbet (1996) explained that the long term strategic planning is of little use

for the Hospitality establishments and further that the managerial focus should be on

the creative and innovative practices to achieve the competitive advantage.

2.5 BUSINESS FORMAT AND COMPLEXITIES:

The business format of the International Hospitality Industry is diverse which include

direct ownership by the chains, franchising, management contracts, and consortium.

Olsen and Merna (1998) discussed that the international dimension or the

globalization of the hospitality Industry has added to its complexity. These

complexities arise because of difference in the legislative framework from country to

country, economic and financial factors and market conditions. In response to these

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complexities, the multinational Hospitality companies have subscribed to the

following generic strategies.

1.Export of the Brand that has been well developed in the home country, for example

McDonald‟s, Accor, Forte‟, Marriott, and Oberoi‟s etc.

2. Broad based competitive positioning by the Hospitality Industry on account of the

homogeneous needs and reason for the travel of the international customer.

3.Management expertise export by the multinational Hotel companies to enter

markers with the minimum investment, which describes the current competitive

approach of the lodging firms.

Olsen (1998) concluded that to succeed in the long run, the right kind of the

strategies are required to be chosen by the effective management to react quickly to

the threats and opportunities in the environment, which shall be a challenge to the

Hospitality industry as well. Thus it is clear that the strategy and structure of the

Hospitality Industry is very complex and it has a potential to change at very fast

speed.

This complexity is further increased by the nature of the Hospitality industry, which

according to Knowles (1996), fits well with what Porters describes as the

fragmented industry on account of having no market share with a particular firm, or

can strongly influence the industries outcome, and which essentially involves

undifferentiated products. Hospitality Industry therefore appears to represent the

Hostile environment in which overall market growth is slow and erratic, there is

intense upward pressure on operating costs and competition resulting in high market

concentration. On account of all these factors, Knowles suggested that the strategic

positioning is likely to be of particularly crucial significance.

2.6 GLOBALISATION AND GROWTH STRATEGIES:

The increase in the Global travel, market and environmental trends led to the

Internationalization of the Hospitality Industry. Between the periods of 1950-1995,

International travel has grown by 21 times (WTO-1992) and this led to the

considerable growth in Hotel Industry. Zhao and Merna (1996) explained the

Globalization of the Hospitality and Tourism Industry has accelerated under pressure

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of advances in Technology, communication and transportation, deregulation,

elimination of the political barriers, socio cultural changes, and global economic

development, as well as growing competition in the Global markets.

In case of Hotel Industry specifically, the Internationalization has been based on the

North American branded, relatively up market and business-travel oriented

provisions (Littlejohn 1997). The tendency of the individual groups to develop a range

of brands where different product and services specifications are intended to meet

different market segments was reported to be yet another feature of the Industry

evolution by Alexander and Lockwood (1996), Littlejohn and Roper (1991).

Furthermore, growth in the Hospitality Industry as explained by Olsen, Crawford and

Tse (1994) followed an overall strategy of concentrated growth (directing the

resources to the profitable growth of a single product, in a single market, with a single

dominant technology) on account of the various trends of the 1980‟s and 1990‟s.

Olsen et al suggested that the various forms of the concentrated growth practiced by

the Hospitality Multinational Companies are strategic alliances, franchising,

management contracts, joint ventures and acquisition, all of which reflect the pure

competitive status of the industry and which has resulted in the complete

restructuring of the Hospitality Industry.

2.6.1 STRATEGIC ALLIANCES:

The strategic alliances help the Hospitality Managers to concentrate on the core

activities by centralizing their marketing activities and provide them the competitive

strength and financial stability to stay in the business. The strategic alliances have

been very effective for small establishments, especially Hotels. Morrison (1994)

argued that these establishments choose the most beneficial configuration, which

can provide them the maximum returns.

Anderson Consultancy and New York State University conducted a survey to identify

major trends and Strategic issues that will shape the industry for the future. They

concluded that the strategic alliance is the number one growth strategy in the

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Hospitality operations followed by mergers, joint ventures, franchising, management

contracts and the new developments (Su 1998).

2.6.2 FRANCHISING:

Franchising is an important option of the firm to expand its market. Business format

franchising is predominantly used by fast food operators like McDonald‟s, conversion

franchising the popular example of Best Western Hotels, which implies the affiliation

between the hotel group and individual hotel. The growth in the fast food sector has

been predominantly as a result of franchising.

2.6.3 BRANDING AND POSITIONING:

The multiple branding also drives the growth of the Hospitality companies. Marriott

developed Courtyard (midprice), Fairfield Inn (budget) and initiated J.W. Marriott, as

upscale Luxury Hotels .The advantage of the multiple branding is that apart from the

growth, it provides competition from the single brand (Lewis and Chambers 2000).

The restaurant industry too uses multiple branding heavily. Darden Restaurants of

US owns Red Lobster, Olive Garden and Bahamas Breeze. Tricon Global owns

Pizza Hut, Taco Bell and KFC and Brinker International have eleven different

restaurant brand concepts.

2.6.4 MANAGEMENT CONTRACTS:

Management contract pioneered by Hilton Corporation, proved to be extremely cost

effective method of entering the new markets as compared with the asset acquisition

growth strategy. Knowles (1998) explained that there are expectations on both sides.

From the Management point of view, the Hotel property has to conform to its portfolio

requirements and the Management has to prove its competitive strength through the

sophisticated pricing and marketing efforts.

2.6.5 MERGERS AND ACQUISITIONS:

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Mergers have been generally used for gaining from the valuation discrepancies

between company stock market price and what is perceived to be their true value,

capitalising on inefficient management, achieving product line diversification,

benefiting from economies of scale, and other synergetic benefits, taking advantage

of the unused tax shields, avoiding bankruptcy for the acquired firms, etc (Kim and

Arbel1998). They argued that the merger decision is like any other investment

decision and should appeal to the long-term goal of maximising shareholder value.

The major change in the ownership pattern occurred in the Hospitality Industry

because of opportunity of the large cash flow available with some of the big

companies (Barge 1998). In the UK, for example the acquisition of Swallow Hotels

by Whitbread in 1999, that of Holiday Inn by Bass, the brewing company is the

examples of change in the ownership of big Hotel companies.

In America as well, the Entertainment and Gaming companies have discovered that

taking over some Hospitality business as well can improve their return on investment

(MGM Resort Annual Report 2000). The philosophy behind the acquisition of Mirage

Resorts by MGM Grand, the US based gaming industry was the Industry Leadership,

which the company believes is be determined by the size alone. Thus the presence

of the big entertainment and gaming firms in the list of the best performing Hospitality

Industries should not be a surprise to the reader.

Similarly, Hilton International is a subsidiary of Ladbroke Group plc, and owns the

Hilton brand name outside US and is separate company from Hilton Hotel

Corporation. Ladbroke acquired 92 Hilton Hotels, in 1987 for $1.2 billion. Ladbroke,

like MGM of US is yet another biggest European gaming company.

2.7 CONCLUSION: The Hospitality Industry like any other industry is competitive, innovative and is being

swept by the wave of modernization in operations and outlook. The strategic

practices for planning the growth and for increase in the return on investment are

being utilised effectively. There have been severe changes in the Hospitality

structure due to the changing Global trends especially related to Travel, business

pattern, social and other technological trends. The wave of change in the ownership

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of the Key Hospitality firms has added complex dimensions to this otherwise

fragmented Industry. It is clear from the discussion that more growth in this sector is

expected in the future and to cope up with this growth, the best strategic

management practices shall be required by this Industry.

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CHAPTER - 2

2.1 ORGANIZATIONAL PURPOSE AND BUSINESS OBJECTIVES

_____________________________________________________

“Every individual endeavours to employ his capital so that its produce may be of

greatest value. He generally neither intends to promote the public interest, nor knows

how much he is promoting it. He intends his own security, only his own gain. And he

is in this led by an invisible hand to promote an end, which was no part of his

intention. By perusing his own interest, he frequently promotes that of society more

effectively than he really intends to promote.(Adam Smith, Wealth of Nations 1776)”.

Since Adam Smith‟s time, the purpose of the businesses has been discussed

thoroughly in the Management literature. Business traditionally has meant to be

economically or money motivated and the view continue till now. Eugene and Louise

(1991) explained that maximizing the price of firm‟s common stock is the primary

objective of the firm even though there are the other objectives like the personal

satisfaction of the managers, the employee welfare, good of community and society

at large. Still for the reasons, stock price maximization is the most important goal of

the most corporations and it is a reasonable objective on which to build the business

decision rules. To explain the purpose of the organization, Lynch (2000), highlighted

that it is essential to take into account several sets of interests, the shareholders, the

corporate governance and the Culture of the organization. He explained that the

organizational purpose has the dimensions like Time, Innovation, and Value added

dimension, survival, growth, leadership, stakeholder, life style and knowledge.

The debate on the purpose of businesses continues in the strategic management

field .The views presented range from that of profitability to responsibility. Wit and

Meyer (1998), explained that the organizational purpose lies in between the

profitability and responsibility aspects of the business. The two extreme views about

this paradox are that corporations are established to serve the purpose of their

owners and that it is in the best interest of the corporation share holders to see the

increasing value of their stock, which is usually referred to as shareholder

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perspective. The other view is that corporations should be seen as the joint venture

between shareholders, employees, Banks, Customers, Governments and the

communities. Since all of these parties hold a stake in the organization and therefore

it is expected that the Corporation will take its responsibility to develop the strategies

in accordance with their interest and values. This point of view is referred to as

Stakeholder perspective.

Peter and Waterman (1982) in their famous book, In Search of Excellence, studied

the attributes of 43 major successful American Corporations according to six financial

yardsticks. They came to conclusion that these companies displayed eight excellent

attributes and that these attributes can be useful to other companies too. These eight

attributes of corporate excellence identified were-a bias for action, staying close to

the customer, autonomy and entrepreneurship, productivity through people, hands

on-value driven management, sticking to the knitting, simple organization form and

lean staff and simultaneous loose tight properties. Rapport (1986) however found

that these excellent companies no doubt had a superior financial performance over

1960-80, they did not provide consistently superior returns to the share holders via

dividends plus share price appreciation. Thus to emulate these attributes was not

considered useful for the companies keeping in view that these attributes do not

contribute to the share holder perspective.

Rappaport also suggested that out of the entire alternative strategies considered by

the Management, the ones, which provide the greatest competitive advantage,

should be those, which also create greatest value for the Shareholders. There are

the various stakeholders, which have direct financial claim on the firm. Employees

require a competitive salary, customers want quality products at the competitive

price, suppliers have their own expectations etc. Thus ability of the firm to generate

the cash is required to meet the expectations of its stakeholders, which support the

shareholder claim. Thus we see that significant strategic concern is the organization's

relationship with its stakeholders and no firm can afford to ignore the groups and

individuals who could help the organizations to prosper in the long term.

However, the issue of shareholder and stakeholder claims was beautifully debated in

the Long Range Planning Journal by Argenti and Campbell (1997). Argenti debates

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for the rights of non share holder in influencing the organization by suggesting that

sole purpose of all human organizations is to deliver a satisfactory benefit to a

specific set of human beings. Thus the purpose of School is solely and exclusively to

educate the children and it does not exist for Teachers, Publishers etc. Agrenti

identifies two types of the stakeholders, different in number and of different types with

different demands on the organization.

The two types of the stakeholders were identified by Argenti to clear the confusion:

shareholders, who are the intended beneficiaries, for whom the organization was set

up and collateral stakeholders, the stakeholders who will benefit from the operations

of the organization but have no right to control it. Agrenti thus reiterates the support

for much greater claim of the shareholders, as it is this group, which own the

company, and is in a different position to all other different parties. Further the

difference is enshrined in a law; the legal position of the shareholders is different

from that of other stakeholders.

Campbell believes that stakeholders other than the shareholders should have a say

in how an organization is run. For Campbell the purpose of school does not change

when it is privately owned. Campbell differentiates two types of the stakeholders as

active and passive. The providers of the capital are the active stakeholders

(Financers, Customers, Employees and Suppliers). These stakeholders can be or are

involved in daily operations of the business and can thus have a direct impact on the

performance. Passive stakeholders (Government and pressure groups) on the other

hand, have a less direct involvement. Campbell suggests that the active

shareholders should be allowed and encouraged to participate in the running of the

firm and thus the Organizational purpose can‟t really be just to give the maximum

returns to the shareholders.

The objectives of a firm are closely linked to the purpose. Traditionally and

historically a business establishment has been regarded as an economic institution.

Profit maximization was regarded as a single business objective. However, Drucker

(1959) proposed that the central objective of the firm should be its survival. This

objective is to be accomplished through a set of survival objectives based on survival

functions, which the firm must fulfil to stay to stay alive. Profit maximization for

Drucker is a wrong concept whether it be short or long term. The stakeholder theory

19

of objectives on the other hand maintains that objectives of the firm should be

derived by balancing the conflicting claims of the various stakeholders in the firm;

Managers, workers, suppliers, customers etc. The firm has a responsibility to all of

these and firm‟s objectives must be configured to give each measure of satisfaction.

The need to clarify the organizational purpose and objectives is to provide a

framework for the organizational strategy development. Ansoff (1986) explained that

capital investment theory makes no use of the concept of strategy; rather its need

arises from the fact that the firm needs the direction and focus in its search for and

creation of new opportunities. Thus the importance of the purpose, goals and

pursuits of the businesses are more important for the strategy formulation then any

thing else. Strategy in the simplest terms refers to either made, or the actions taken

in an effort to help an organization fulfil its intended purpose. Also when the strategy

is meant to be the plan for the future, it is the intended strategy, which is being

referred to and when the strategy is the actions taken, it is the realized strategy. In

either of the case, Miller and Dess(1996) consider the strategy as the efforts directed

towards fulfilling organizational purpose (Fig 1).

INTENDED

STRATEGY

Fig 1.

REALIZED

STRATEGY

2.2 STRATEGY FORMULATION AND MISSION STATEMENTS

Mintzberg (1996), defined strategy as the pattern or plan that integrates an

organization‟s major goals, policies, and actions sequence into a cohesive whole. A

well-formulated strategy helps to marshal and allocate an organization‟s resources

into a unique and viable posture based on its relative internal competencies and

shortcomings, anticipated changes in the environment, and contingent moves by the

intelligent opponent. Thus we see that the driving force of the firm is the goals and

objectives: the performance, which the firm shall seek to achieve. Attaining the

PLANS &

POLICIES

ACTIONS

TAKEN

Strategic intent, Vision, Mission

Goals, Objectives

Results observed

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objectives is important to the strategy. Fred (1993) proposed the following

comprehensive strategic-management model.

Feedback

the tss

Feedback Strategy Strategy Strategy Formulation Implementation Evaluation Fig : 2 Strategic Management model as proposed by Fred(1993).

Porter (1980), stated that a company can outperform its rivals only if it can establish

a difference that it can preserve and that the essence of the strategy is choosing to

perform activities differently then the rivals do. Porter‟s view of the strategy is

sustainable competitive advantage a theme that he perused in Competitive Strategy

and Competitive advantage. Achieving the Competitive advantage is the heart of any

strategy, and this is the underlying notion of Porters concept of generic strategies.

Achieving the competitive advantage requires the company to make a choice about

the type of competitive advantage it seeks to attain and the scope within which it will

attain it (Porter 1985). The two basis types of competitive advantages (low cost and

Perform External Audit to identify key opportunities and threats

Establish long-term objectives

Establish annual objectives

Identify Current Mission, Objectives, And Strategies.

Revise the business mission Allocate

Resources

Measure and evaluate Performance

Perform internal audit to identify key strength and weaknesses

Select the strategies to pursue

Devise Policies

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differentiation) combined with the scope of activities for which a firm seeks to achieve

them lead to three generic strategies for achieving above average performance in an

industry: cost leadership, differentiation and focus. The two variants of focus strategy

are cost focus and differentiation focus. The competitive strategies are meant to

provide the long-term profitability and the sustainable position against the forces that

determine industry competition.

Fig: 3 Three Generic Strategies.

Prahlad and Hamel (1990) explained that the roots of the competitive advantage are

in the core competencies of the corporation. The competitive advantage in the long

run derives from an ability to build, at lower cost and more speedily then competitors,

the core competencies that spawn unanticipated products. The core competencies

are about organization of work, delivery of value and harmonizing streams of

technology. It is the communication, involvement and a deep commitment to working

across organizational boundaries.

Chakarvaty and Lorange (1991) identified five distinct steps in the strategy process.

These are objective setting, strategic programming, budgeting, monitoring and

incentives and staffing. The first step in the strategic planning system, objective

Competitive Advantage Lower Cost Differentiation Broad Target Competitive Scope Narrow Target

1.Cost Leadership 2.Differentiation 3A. Cost Focus 3B.Differentiation Focus.

22

setting, is to determine a strategic direction for the firm and each of its decisions and

business units. It is to determine a strategic direction of the firm and each of its

divisions and business units. Embedded in these objectives should be the vision of

CEO and the top management team. Raynor (1998) explained that it is the strategy,

which is the first level of bringing the vision (which is necessarily future oriented) into

the present (where action is possible) and achieving the goals (through action) fulfils

the strategy, which makes the vision a reality.

The question, that what is our business, for Peter Drucker is synonymous with asking

the question, “What is our Mission?” As we can see form the Fred‟s strategic

management model, identifying mission and objectives is the first step in the strategy

formulation. This is referred to the strategic intent, which can be either very broad

(vision and mission) or more focussed (goals and objectives). Noy (1998) suggested

the inclusion of the Mission statement in the Strategy Formulation to make it

practicable and implemental. He referred Mission Statements as having the wide

scope and far future definition of purpose and strategy for the various stake holders

of the firm.

2.3 ORGANIZATIONAL VISION

There is a definite influence of founder‟s attributes and philosophies on the

organization. This is usually termed as the Vision, which is defined as the “

description of something (an organization, a corporate culture, a business, a

technology, an activity) in the future. Lynch (2000) explained that in developing the

future of the organization, there is a need to develop a vision of the organizations

future. Vision as defined by Lynch is the mental image of a possible and desirable

future state of the organization and it is the backdrop of the purpose and strategy of

the organization. Karlof (1989) defined Vision, as the sense of something seen in a

dream, a term a used to describe a picture of a relatively remote future in which the

business has developed under the best possible conditions and in accordance with

hopes and dreams of owner or chief executive. A vision provides a benchmark for

what one hopes to achieve in business, and can be a guide to the level of ambition of

the strategic planning. Further Karlof explained that a Vision could be said to link

23

business with the corporate culture, creating a common standard of values for the

individual performance of the employees. The five reasons to develop the vision

are.

1.To check the competitors as they shall the most organizations compete for the

business and resources

2.The mission and objectives may be stimulated in a positive way by the strategic

options that are available from a new vision.

3.There may be a major strategic opportunities from exploring the new development

areas that go beyond existing market boundaries and organizational resources.

4.To keep in touch with the future developments like information technology,

biogenetics, environmental issues, life style etc.

5.To provide the challenge for both junior and senior managers.

Thomas (1992), in his article “Strategic Vision or Strategic Con? Rhetoric or Reality

refers to three surveys in which he played a major part. In the managing the flat

organization survey, it was found that every respondent assessing it believes that

clear vision and mission are important and about three quarters of them consider it to

be very important. In another survey on the quality, the survey concluded that a clear

and shared and quality vision and top management commitment are essential. The

third survey on communicating for change led to the conclusion that clear vision and

strategy and top management commitment are jointly ranked as the most important

requirements for the successful management of change.

Vision statements carry the long-term aim of the organization. Hussey (1998)

explained that the vision statements will also include mention of the values of the

organization and that the reason for a written vision statement is to aid

communication of the vision across the whole organization and to customers and

suppliers as well. The vision statements should have some sort of relevance for the

organization other wise they lack any meaning however fashionable it may appear.

Hussey also emphasised that the vision statement should also include the mention of

the values of the organization. Also what is really required is that concept of the

objectives, which links the components of the vision with ways of measuring the

corporate progress, and linking these with the personal standards of performance.

24

Tregoe (1998) defined the vision or strategy as the framework, which guides those

choices that determine the nature and direction of an organization. He found that

there are five key questions that must be asked and answered for an organizations

vision to be clear and focussed. These questions are:

1.What is the thrust or focus for future business development?

2.What is the scope of products and markets that will and will not- be considered?

3.What is the future emphasis or priority and mix for products and markets that fall

within that scope?

4.What key capability is required to make strategic vision happen?

5.What does this vision imply for growth and return expectations?

Hamel and Prahlad (1994) suggested five criteria for judging the relevance and

appropriateness of a vision statement. The important action points that arise from the

investigation are connected with:

Criteria Indicative area to be investigated

1.Foresight What imagination and real vision is shown?

Over what time frame?

2.Breadth How broad is the vision of the changes likely to

take place in the industry? And of the forces that

will lead to the changes?

3.Uniqueness Is there an element of uniqueness about the

future? Will it cause our competitors to be

surprised?

4.Consensus Is there some consensus within the organization

about the future ? If not, there may be the problem

if too many different visions are pursued at once.

5.Actionability Have the implications for the current activity been

considered? Is the basic agreement on the

immediate steps required? Have the necessary

core competencies and future market opportunities

been identified?

In order for a vision to provide a sound base for the development of a company

strategy, the vision should be characterised by a number of conditions. Namaki

25

(1992) emphasised that the good strategic vision should be translatable (translated

into series of goals and strategies for the company), powerful, challenging, unique

and feasible (achievable with realistic expectations) and idealist.

The corporate vision has an importance of its own in the businesses. The success of

the McDonald‟s was attributed largely because of Ray Croc‟s vision of providing

QSCV (Quality, Service, Value and Cleanliness) to its customers. In their best selling

book ” Built to last, Successful Habits of Visionary Companies, Collins and

Porras(1996), explained the visionary company as the premier institutions, the crown

jewels in their industries, widely admired by their peers and having a long term track

record of making a significant impact on the world around them. They believe that the

visionary companies preserve and protect its core ideology, yet all the specific

manifestations of its core ideology must be open for change and evolution.

Northwest Airlines describes its vision,”To build together the worlds most preferred

airline with the best people; each committed to exceeding our customers

expectations everyday. John Dasburg, the chief executive officer, has said about the

vision, “it describes the destination we are headed .We don‟t know how long it will

take to arrive at this destination, but we know we want to get there.”(Total Research

1999). Consider another vision statement of Amoco Inc. “Amoco will be a global

business enterprise, recognized throughout the world as pre-eminent by employees,

customers, competitors, investors and the public. We will be the standard by which

other businesses measure their performance. Our hallmark will be the innovation,

initiative, and teamwork of our people “. The common themes are ,a distant dream,

core beliefs, focus on having the positive impact on the world, concern for the

important stakeholders- customers and employees and the desire to be the Jewel

Crowns in their businesses.

Mission statements on the other hand stand for the purpose of the business,

behavioural standards, and culture. They are important motivational tools for

employees who have a common goal to achieve the company mission. They are an

important communication tools for the company, which can be used internally and

externally as well. The most important and distinctive feature of the mission

statement is that they simply define the business.

26

Numerous works have been carried out to study the impact of the vision on the

strategy of the company . Harris and Ogbonna(1999), studied the relationship

between the vision and the strategy of an organizational founder and the strategy of

the subsequent managements. They also analysed the potential effect between the

founding vision and current strategy using two case studies. They came to the

conclusion that the strategic and cultural legacy of the founder of a company has a

profound effect on the strategy of subsequent managements. And further the destiny

of each company had clearly depended on the vagaries of the environmental

conditions and constraints.

However there has been a counter argument in relation to the utility of the corporate

Vision .In a recent study, Lissack and Roos (2001) argued that the very idea of

having a corporate vision is of limited use in today‟s complex business landscape.

Keeping in view the current unstable business world, they suggested that what

matters is being coherent rather then being visionary. They challenged the idea that

the Strategy should focus on the company Vision, team Vision and founders Vision.

Instead they argued that concept of the vision has been transcended by the concept

of coherence, which refers to linkages, or connectors, which hold the company,

together and which enables the firm to function smoothly and provides synergy to it.

They further suggested that companies should not be organised around achieving

vision and executives should not spend time in articulating the vision.

2.4 MISSION STATEMENTS : WHAT THEY STAND FOR?

The firm has to serve the interest of many stakeholders working for it. Ansoff (1986)

explained that the firm realistic process of identifying the goals objectives must start

identifying the mission of the firm, which is the list of the aspirations of the influential

constituencies, which the firm serves. David (1993) defined the mission statements

as the enduring statements of purpose that distinguish one business from other

similar firms- and identifies the scope of the firms operation in product and market

terms. The mission statements describe the value and priorities of firm and broadly

chart the future direction of the firm. Sanderson and Luffman (1991) discussed that

the mission statements reveal the current reason for the existence of an organization,

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and is developed by the top management of an organization on the basis of the

stated vision. A mission statement define the purpose of the organization, it acts as

the “invisible hand “ that guides people within the organization, so that they can work

independently and yet collectively to achieve desired levels of organization

performance (Kotler et al., 1996). The mission statements thus can be defined as

those statements that distinguish one business from another, explaining the reason

for why the business exists at all, guiding the people collectively to achieve the

desired organizational goals. This definition is clear in the mission statement of Ford

Credit, which defines its mission statement “to maximize our value to Ford Motor

Company by continuously improving and expanding our automotive financial

products and services to exceed our dealers „ and customers expectations. We seek

to enhance our value by expanding our customer base, promoting customer loyalty,

fostering and entrepreneurial spirit in our people and seeking new ventures that

leverage our core competencies. This will produce significant income growth at good

returns”.

Campbell and Tawadey (1992) interviewed the managers in companies with a sense

of mission (clarity about what they are doing and enthusiasm for doing it). They

developed the broader definition of mission, which include the elements like

„purpose‟, „strategy‟, „values‟ and „behavioural standards‟. This has been drafted in

the form of a diagram (Fig4) called Ashridge Mission Model.

Purpose

(Why the company exist)

Strategy Company Values

(The Commercial Rationale) (What Senior Management

Believes in)

Standards

(The policies and behaviour patterns that guide how the company operates)

Fig 4: Ashridge Mission Model

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COMPANY VALUES: Raynor (1998) defined the company values as the principles

or the concepts of the intrinsic worth with which to align one‟s actions as an end in

itself. They are the organization‟s essential and enduring tenants and a small set of

general and guiding principles: not to be confused with specific cultural or operating

practices: not to be compromised for financial gain or short-term expediency (Collin

and Porras (1996). They explained that the key step in building the visionary

company is to articulate a core ideology, which was expressed as:

Core ideology = Core Values Purpose

The core ideology of Proctor and Gamble is reflected in its mission statement “We will provide products of superior quality and value that improves the lives

The core ideology of Proctor and Gamble is reflected in its mission statement “We

will provide products of superior quality and value that improves the lives of the

world‟s consumers”. Mintzberg and Quinn (1996) explained ideology as rich system

of the values and beliefs about an organization, shared by its members, that

distinguishes it from the other organizations. The key feature of the ideology as

explained by Mintzberg and Quinn is its unifying power, which ties the individual to

the organization, generating and „esprit de corps‟, a „ sense of mission‟, in effect, an

integration of individual and organizational goals that can produce synergy. Edwards

(1977) referred to the organizations with strong ideology as „Stylistically rich‟.

Mintzberg and Quinn referred to these „Stylistically rich organizations‟ as Missionaries

as they are akin in their beliefs to the religious organizations by that name. They

explained the characteristics of Mission to be:

1.Clear and focussed, so that its members are easily able to identify with it.

Fig: 5 Collin and Porras (1996)

Purpose

Core Beliefs and Values

Environment

Mission

Vivid

Description

29

2.Inspiring, so that the members do, in fact, develop such identifications; and

3.Distinctive, so that the organizations and its members are deposited into a unique

niche where the ideology can flourish.

The clarity, inspiring and distinctiveness can be found in the mission statement of

Caterpillar .It reads as” Our single focus will continue to be helping the customers all

over the world succeed in their businesses. When we do that- when we make them

winners - then employees, dealers, and stockholders win as well”.

STANDARDS: Campbell and Tawadey (1992) explained that mission is made real

only when it affects behaviour and guides peoples actions. They further explained

that strategy contains the message about what should be achieved, e;g low cost

production , highly excellent service etc and values contain the message about how

things should be done. The synergy of the two results in the strong behavioural

standards, which are the organizations rule of thumb ‟ the way we do things

around here‟. This forms the plat form for the culture, which Hofstede (1980)

described as the collective mental programming, which is the property of the group,

not of the individual, although it is the individuals who carry it. This sense belonging

to the organization in itself is the powerful source of motivation for the employees.

Peters & Waterman (1982) referred it as the power of the shared ideology, which

acts as a driver of a behaviour. They described successful organization as ones in

which people are driven by a sense of excitement and where they have a strong

feeling of belonging to the organization. The ideology promoting this sort of

enthusiasm is reflected in DaimierChrysler mission statement. It starts with this

motivating zeal “ Imagine two companies, each with a clear vision. Strong and

successful independently, together they would be the world‟s leading automotive,

transport and services company. Now a team, they have created a partnership of

extraordinary people who share a common passion; to design and build great

products that customers are proud to own”.

Based on the writings of Schein‟s(1998), Etzioni‟s(1961) and Pascale & Athos (1981)

, Stacey(2000) suggested that the organization succeeds when its people , as

individuals , are emotionally engaged in some way , when they believe in what their

30

group and other organization are doing , when the contribution they make to this

organizational activity bring the psychological satisfaction of some kind , something

more then simple basic rewards. He further explained that people believe and are

emotionally charged when their organization has a mission or set of values and when

their own personal values match with those of the organization.

2.5 THE IMPACT AND PURPOSE OF MISSION STATEMENTS: A LITREATURE

REVIEW:

The Mission Statement‟s started getting importance since Peter Ducker (1973)

regarded them as a precursor to clear and realistic business objectives. There is a

strong evidence for the fact that Mission Statements can contribute to the successes

of the business. There is considerable evidence, which authenticates the fact that the

lack of the Mission Statements can be a possible cause for the failure. That the

mission statements are important part of the strategic planning process is known

already, in further to this they can be judgemental in deciding the feasibility of the

strategy. Noy (2001) suggested two tests for a formulated strategy as he indicated

that there is no accepted procedure to perform a feasibility test on the strategy.

These tests include verifying whether the company has a mission statement, which is

the first part of the strategy formulation, and that the values proclaimed in it are

shared by the most people in the organization.

Being the basis of the organizational strategy, the mission statements are been

adopted and utilized effectively by most of the companies. In its study of Business

Week 1000(the 1000 largest businesses in America), firms with mission statements

had an average return on share holders equity (ROE) of 16.6 %, while the return for

those without the mission statement was 9.7%, (Rarick & Vitton , 1995). The disparity

of 71.1% between the two groups of the firms is large enough to substantiate the

value of having and utilizing the mission statements. Bart, Bontis and Taggar (2001)

studied the relationship between mission and organization performance, which was

modelled on the previous research. They found that the mission statements could

affect the financial performance. Further they found several mediating elements

existing, which include commitment to mission and the degree to which the

31

organization aligns its internal structure, policies and procedures. These variables

were found to be positively associated with the employee behaviour and this variable

was found to have the most direct relationship with the employee behaviour.

Germain and Cooper (1990) in their research “How a customer Mission Statement

affects company performance” concluded that customer service Mission Statements

is effective in sensitising all employees. In another research , Andrew Campbell

(1989) indicated that in efficient and effective companies, a good mission statement

could over come the rivalry of the stakeholder group. Klemm, Sanderson and

Luffman( 1991) shared the same view and explained that there are two simple views

on the purpose of the Mission Statements: one is that it is primarily for external

public relations and the other is to motivate staff within the company. However they

added one more dimension to the use of the Mission Statements that they are an

assertation of the leadership. They also indicated that Management's belief about the

organizations distinctive competences, expressed in the mission , provide a frame

work for the resource allocation decisions , and give a sense of the corporate identity.

Their survey of 59 top companies from the Times 1000 showed that the main

purpose of the mission statements emerges as internal communication and better

leadership.

The mission statements can an important tool for communication within ( for

employees) and for outside the company( investors and other stake holders). Bartkus

and Glassman (2000) in their study of Mission statements came to a conclusion that

the best mission statements are those which are communication tools and which

simply define the company business & suggest a future goal. The example of this

type of mission statement is of Alcoa. It reads” Alcoa is a growing world wide

company dedicated to excellence through quality – creating value for customers,

employees and shareholders through innovation, technology, and operational

expertise. Alcoa will be the best aluminium company in the world, and a leader in

other businesses in which we choose to compete”.

In terms of improving the external communication also, Mission statements were

found to be very effective in a research study. Zairi and Letza(1994) indicated that a

key to the economic success is that a company should be clear in its purpose and

32

that the existing methods of reporting the company performance have proven to be

inadequate. They suggested that the missing link could be incorporating the mission

statements to share the mission / purpose of the organization with the end users.

This explanation of the mission statements as a tool for the internal and external

communication is reflected in the mission statement of Microsoft “Since its inception

in 1975, Microsoft‟s mission has been to create software for the personal computer

that empowers and enriches the peoples lives in the work place, at school and at

home. Microsoft‟s early vision of a computer on every desk and in every home is

coupled today with a strong commitment to Internet – related technologies that

expand the power and reach of the PC‟s and its users. As the world‟s leading

software provider, Microsoft strives to produce innovative products that meet

customer‟s evolving needs.

King and Cleland (1984) recommended that organizations carefully develop the

mission statements to ensure the unanimity of purpose within the organizations, to

provide a basis or standard for allocating organizational resources, to serve as a

focal point for the individuals to identify with the organizations purpose and

directions: to facilitate the translation of the objectives into a work structure involving

the assignment of tasks to responsible elements within the organization and to

specify organizational purposes and the translation of these purposes into objectives

in such a way that cost, time, and performance parameters can be assessed and

controlled. Webster (1992) indicated that the major function of the mission

statements is to make clear what the organization will do and what business they are

in, its role is to communicate the set of values and beliefs that put the customer first

in the organization decision making process, and to communicate the value

proposition of that culture to internal and external stakeholders.

2.6 COMPONENT’S OF MISSION STATEMENTS:

Jauch and Gluech (1988) explained that many organizations define their basic

reason for existence in terms of their Mission statements using them to legitimise the

organization, providing a statement to all the stake holders of what the company

33

stand for, its purpose, image and character. Mission statements can be of varying

length, format and content. A research conducted by Total Research Strategic

Marketing Service (1999) indicated that the Mission Statements can be as short as

seven worded to as long as 1000 worded crafted prose. Fred (1996) indicated that

most of the academics and practitioners of the Strategic Management consider an

effective mission statement to exhibit the nine characteristics, which include the

following components and corresponding questions:

1.Customers: Who are the firm‟s customers?

2.Products or services: What are the firm‟s major products or services?

3.Markets: Where does the firm compete?

4.Technology :Is technology a primary concern of the firm?

5.Concern for the survival, growth, and profitability: Is the firm committed to economic

objectives?

6.Philosophy: What are the basic beliefs, values, aspirations, and philosophical

priorities of the firm?

7. Self concept: What is the firm‟s distinctive competence or major competitive

advantage?

8.Concern for the public image: Is the firm responsive to social, community, and

environmental concerns?

9.Concern for the employees: Are employees considered to be a valuable asset for

the firm?

Ackoff (1986) explained that the organizations define their business through mission

statements and suggested that they should contain goals, differentiation factors,

identify the organizations aspirations and define the role of all the stake holder

groups. Total Research (1999), a Strategic Marketing Consultancy, carried out

extensive survey of the Mission Statements of US and European companies and

they concluded that most important themes overall as per the survey are customer

care/ focus and product or service quality/ excellence .In the longer mission

statements more themes were found to exist most common of which were aspiration

of the companies for market leadership, competitiveness, innovation, staff focus,

social responsibility and shareholder value.

34

US % EUROPE%

Customer Care/Focus 82 55

Product Quality/Excellence 76 75

Market Leadership/

Most Competitive

70 45

Staff Focus/Motivation 45 35

Innovation 45 35

Table 1. The Five Most Frequently Mentioned Themes

Total Research (1999).

Lynch (2000) explained that since no two organizations are same in terms of the

ownership resources or environmental circumstances, the mission statement are

personal to each organization. He suggested that the criteria for judging the mission

statements should be following:

1.Specific: To have impact upon the behaviour of individuals throughout the

business.

2.Distinctive: The mission statement should reflect the distinctive advantages of the

organizations.

3.Realistic and attainable

4.Flexible: To take into account of shifts in the environment.

Want(1986) considered the components of the mission statements to be Purpose,

Principle business aims, Corporate identity, Policies of the company and corporate

values. Different approaches about what the Mission Statements components should

be like have been were proposed. Pearce (1982) identified a list of eight key

components of mission statements which include :

1.Target customer and markets

2.Principal products and services.

3.Geographical domain.

4.Core technology.

5.Commitment to survival, growth and profitability.

6.Key elements in the company philosophy.

7. The company self- concept.

35

8.The firm's desired public image.

It is evident from the Table1, showing the content analysis of the Mission Statements

of US and UK companies by Total Research Consultancy that 76% of the US

companies and 75% of the UK companies aim for the product quality and excellence.

Market Leadership, which is sought by 70% of US companies and 45% of UK

Companies, reflects another important dimension, which Mission Statements aim at.

Abell (1980) suggested that the question" What is our business? could be answered

in terms of three dimensions. These dimensions are what are the customer groups

that are being satisfied, the need that is being satisfied and how the needs are been

satisfied. From the literature, it is clear that the components of the mission

statements, which are agreed upon, by the most of the writers are concern for the

customers, purpose, identity/image, differentiation factors, corporate values,

products, markets, and concern for the survival, growth, profitability, company

philosophy and employee& social concern. Of all these components, the most

important seem to be the customer oriented one, which has been thoroughly

stressed upon in the academic literature and in the mission statements as well.

The reason for this is that the customer focus is the bare necessity these days. Zairi

(2000) stressed this fact by explaining that the organizations need to indicate that

they are truly focussed on their customers through their deeds and actions. He

further explained that being customer focussed means having a clear service

strategy, which is deployed with some clear purpose, and some goals and targets.

Strong (1997) also concluded by researching on the content analysis of 220 Mission

Statements of Times UK 1000 firms. The research showed that there is a trend to

focus on the customer as a core stakeholder, growing away from the simple analysis

of needs and wants, with the customer as the focal point of the strategy process,

having the priority over competitors, employees and stakeholders.

3.7 HOW QUALITY MANAGEMENT AND INNNOVATION INFLUENCE THE

MISSION/ VISION STATEMENTS:

36

Ennew and Binks (1996) explained that the customer focus is commonly regarded as

being one of the most effective strategies to develop competitive advantage. This can

also be seen in the strategic impact of quality, which is widely viewed as the core

success factor in retaining existing customers and capturing the new ones. Allen and

Kilmann (2001) examined the impact of the reward practices on the relationship

between an organizational study of the reward based examined the relationship

between the organizational strategy based on the principles of the Total Quality

Management and perceptions of the firms performance. They recommended that

Managers should communicate their intentions and reasons for the quality

improvement and implementing quality practices via the vision and mission

statements apart from other forums.

In an era of Globalisation, increased competition, new technologies and e-commerce,

organizations are finding it harder to compete. In this dynamic and changing

environment, one way to create the growth and sustain the performance is to

innovate (Patel 1998). Further it was explained that one way to achieve the growth

and sustain the performance is to encourage the creativity and innovation within the

organization. Jones (1996), explained that the development process of innovation

begins with the precise formulation of the objectives Vis a‟ Vis strategy for achieving

them. The firms mission statement as such should address issues relating to the

innovation; at least innovation objectives should be precisely and clearly stated.

The mission statement (corporate overview as referred) of Anheusar- Busch is based

on quality and innovation. They believe that there are two primary reasons for their

outstanding record of achievement.

Quality Unsurpassed: At Anheusar- Busch, Quality is more then a goal- it is a way

of life. Quality doesn’t just happen. In the end, quality comes for having the human

technological and financial resources to invest in it each and every business day, An

unwavering commitment to quality is at the heart of how Anheusar-Busch has done

business since 1852.Then, as now, it is the key to our success and will continue to

be in future.

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Innovative Approach: Innovation, a long – standing strategy at Anheuser- Busch,

represents the path to greatness. Adolphus Busch employed this strategy 129 yrs

ago to make Budweiser the first national beer-using new ideas like pasteurising beer,

refrigerating railcars to transport it across the country and mobilizing grassroots

salespeople to market the product. Today, Anheuser-Busch has some of the most

innovative brewing, packaging and theme park facilities in the world. Leaders keep

there eye on the future and continually find new ways to think about their business.

Anheuser- Busch is no exception.

Innovation and continuous Quality improvement are thus the desirable features,

which add an important dimension to the mission statements, which can overall help

in the overall organizational effectiveness. Jackson, Yau, Howard Gitlow and

Scandura (1994) discussed that quality management addresses the need to

establish the constancy of the purpose towards improvement of product and service.

The statements of vision and mission are starting point for the constancy of the

purpose, because they attempt to align the organizational process with the business

strategy. Thus it is clear that mission / vision statements have a clear link with the

quality management and innovation as well.

The desire for quality and innovation is well blended with the mission statement of

Schlumberger Limited.” We are a global solution provider to resources industry

customers worldwide. We help them to manage resources, enhance transactions and

strengthen the relationship. We deliver innovative solutions by providing

measurement products, systems and services with a total commitment to quality. Our

approach is centered on creating and sharing value with our customers.” Thus it is

clear that the mission/ vision statements can play an important role in establishing

the quality and innovative approach of the firm.

3.8 PERFORMANCE EVALUATION:

Flamholtz and Askeherili (2000) used the return on shareholders equity as

performance measurement tool to test model for organization success and failure.

They considered it necessary to select the Publicly traded companies to determine

the financial performance and the Return on equity figure as a measure of the

38

financial success chosen for this study was justified on the basis of evidence

available in the literature. Tietelbaum (1996) and Eiseman (1997) consider return on

equity as a good measure for assessing the overall performance of the firm and the

performance of the firm‟s management as well.

Return on shareholders equity is accepted as a performance measurement tool and

has been used frequently in the research literature. Return on equity is the ratio of

net income to average shareholders equity for the accounting period. (ROE=Net

Income/Average Shareholders Equity).It encompasses three main levers by which

the management can “prod and poke “ the corporation-profitability, asset

management and financial leverage. It represents executive‟s ability to balance

these three pillars of corporate management and the investors get the clear picture

about the firms ability to deliver the returns and assess the managerial ability to get

the job done (www.fool.com).

However, Wheelan and Hunger (2000) explained that financial ratios such as return

on equity and overall turnover sales and profit margin are fundamental when

analysing corporate financial accounts. These performance indicators have been

chosen for correlation analysis in this dissertation. The performance indicators of the

companies shall be compared with the mission statement score of the respective

companies using correlation analysis (Table 5).

2.8 SUMMARY:

It is very much evident from the Literature that the Mission Statements have an

important role to play in the businesses. They are an inseparable part of the strategic

planning process and can be regarded as the founding principles of the business

defining its purpose and domain as well. Mission statements are said to have the

unique quality of uniting the diverse work force towards common goals of the

establishment by instilling the sense of mission in them.

The Mission statements are the outcome of the organizational vision of the founder-

which links the business with the corporate culture creating the common standard of

the values for the individual performance of the employees. The mission and vision

39

statement are said to aid the communication process within and outside the firm.

Another common grounds for the Vision and mission statement are core beliefs,

distant dream, and concern for the stakeholders, customers and shareholders. The

desire to be jewel in the industry is also a common dream shared in the both.

Top management, on the basis of the stated vision develops the mission statements

which stand for the company values, organizational culture and behavioural

standards and defining the company business as well. They differentiate one

business from another and explain the basic purpose of the business. The key to

building a visionary company is to articulate the core ideology, which is the synergy

of business purpose and core values. This core ideology acts as esprit de corps, a

unifying power that ties the individual to the organization. The other features of the

mission statements should be that they are clear and focussed, inspiring and

distinctive.

The organization succeeds when its people, as individuals, are emotionally engaged

in some way, when they believe in what their group and other organization are doing,

when the contribution they make to this organizational activity bring the psychological

satisfaction of some kind, something more then simple basic rewards. People believe

and are emotionally charged when their organization has a mission or set of values

and when their own personal values match with those of the organization.

From the literature review, Table 2 was compiled which represents the development

of the framework of the mission statement components gradually over the period of

time. Clearly the mission statement components initially stressed the customer

concern and satisfaction and gradually the concern spread towards organizational

aims as well. The concern for technology, survival and growth evolved gradually

followed by company values and employee concern. The recent research suggested

the use of the concepts like defining the business leadership, innovation and social

responsibility and finally the dimension of being the realistic and attainable can be

seen emerging. These components are important to the mission statements and shall

be used to evaluate the mission statements in the research methodology of the

dissertation.

40

Thus it is clear that the mission statement have a clear and definite role to play in the

businesses and hold an important place in the strategic management literature as

well. It is also clear that this area is well researched, well documented and well

connected to the issues related to the strategic planning process in contrast to the

Dilbert Principle, which regard writing the Mission and Vision Statements as “one-off”

activities. The explanation that “A company which makes a good product rarely

needs a mission statement” (Adams1996, pp318), is definitely the not the true

reflection of this important area of Strategic Management.

Abell (1980) Satisfied customer group, satisfied needs, how the needs are

satisfied.

McGinnis (1981) Define organization, organizational aims,

flexible, should evaluate current and prospective activities, clearly

interpreted.

41

Pearse (1982) Target customer, market, products and services,

geographical domain, core technology, survival, growth,

profitability, company philosophy, self-concept, public image.

Ackoff (1986) Goals, Differentiation factors, Organizational aspirations, role of

all the stakeholder groups.

Want (1986) Purpose, business aims, corporate identity, Company policies,

and values.

Campbell&Tawadey(1992) Customers, products/ service,

Location, Technology, Concern for survival, Philosophy, Self

concept, Public image, Employees.

Fred (1996) Customers, Products, Markets, Technology, Survival, Growth,

Profitability, Philosophy.

Total Research(1999) Customer care/focus, products and service quality,

leadership, competitiveness, innovation, staff focus, social

responsibility and shareholder value.

Lynch (2000) Specific, Distinctive, Realistic/Attainable, Flexible.

Frequent Attributes Customers, Product/service, Technology, Market, Survival,

Growth, Profitability, Company Philosophy, Differentiation

factors, Image, Values, Leadership, Stakeholders, Clarity and

Social responsibility.

Table2:Mission Statement Components

3.8 PERFORMANCE EVALUATION:

Flamholtz and Askeherili (2000) used the return on shareholders equity as

performance measurement tool to test model for organization success and failure.

They considered it necessary to select the Publicly traded companies to determine

the financial performance and the Return on equity figure as a measure of the

42

financial success chosen for this study was justified on the basis of evidence

available in the literature. Tietelbaum (1996) and Eiseman (1997) consider return on

equity as a good measure for assessing the overall performance of the firm and the

performance of the firm‟s management as well.

Return on shareholders equity is accepted as a performance measurement tool and

has been used frequently in the research literature. Return on equity is the ratio of

net income to average shareholders equity for the accounting period. (ROE=Net

Income/Average Shareholders Equity).It encompasses three main levers by which

the management can “prod and poke “ the corporation-profitability, asset

management and financial leverage. It represents executive‟s ability to balance

these three pillars of corporate management and the investors get the clear picture

about the firms ability to deliver the returns and assess the managerial ability to get

the job done (www.fool.com).

However, Wheelan and Hunger (2000) explained that financial ratios such as return

on equity and overall turnover sales and profit margin are fundamental when

analysing corporate financial accounts. These performance indicators have been

chosen for correlation analysis in this dissertation. The performance indicators of the

companies shall be compared with the mission statement score of the respective

companies using correlation analysis (Table 5).

CHAPTER - 4

RESEARCH METHODOLOGY

43

AIMS AND OBJECTIVES:

The following chapter aims at establishing the over all research design, explains the

data collection procedure, sets out the framework for analysing the mission

statements, and establishes the statistical tools required for evaluation of the data.

4.1 FORMULATION OF THE RESEARCH PROBLEM:

The research topic was formulated in consultation with the Strategic Management

Tutor followed by the literature research, lateral thinking and observation. The author

was primarily motivated by the observing the gap in knowledge in this area of

strategic management of the Hospitality Industry.

4.2 DATA COLLECTION/ SOURCE OF INFORMATION:

The first stage of design involved the collection of the mission/ vision statements from

the top hospitality establishments. The mission statements that were collected for the

purpose of the study were from the companies that were based on the Dun and

Bradstreet Hospitality Industry Handbook (2000) and confirmed by Price Waterhouse

Cooper Listing of Hospitality Industry. This was done to choose the best performing

establishments. The listing is usually done on the basis of the annual sales by these

sources.

The firms, which are run by the parent companies, were not taken up for the

research, but the parent company was chosen for the purpose. For example Pizza

Hut, KFC and Taco-Bell is run by the parent company Tricon, so instead of these

three company, Tricon was taken up for the study as the parent company shares the

common vision and corporate policies for all its subsidiaries.

The Dun and Bradstreet listing of Hospitality Industry is the most recent resource

available for the purpose of the study. Moreover the listing covers all the segments of

the Industry, International Hotel Chains, Restaurants, Catering Companies etc, which

is a unique feature of this listing. As compared, the other listings available were either

44

only that of top Hotel chains or Restaurants only, which definitely would not have

addressed the research problem.

The mission / vision statements were collected from the companies by contacting

them through email and by the letters posted to them. The research involved the

analysis of about twenty-one major Hospitality companies, which represent about

sixty sub brands. The parent companies were chosen for the analysis as the sub

brands share the vision of the parent company and have the common mission

statements. The companies chosen for the study were all publicly quoted companies.

This was done to correlate the mission statement score with the return on equity,

which is available for public quoted companies only. However, the correlation of the

Mission statement score was also studied with the net profit margin and the annual

turn over of the companies as well which were chosen as the performance indicators

of the company in the literature review of the dissertation.

The financial data of these publicly quoted companies was collected from the reliable

financial resource (Forbes.com) for the return on equity and net profit margin and

Dun and Bradstreet listing for annual turn over. To avoid the ambiguity in the financial

data by taking up the return on equity of the companies for a single year, five years

average return on the equity and net profit margin was chosen for the study.

4.3 RESEARCH DESIGN / SELECTION:

Churchill (1983) defined the research design as the framework or plan for a research

referred to as a guide in collecting and analysing the data. The types of research

design available in the literature include theoretical- applied, descriptive-explanatory,

qualitative-quantitative, exploratory-casual, experimental-non-experimental, etc.

Churchill further explained that the choice of the research design is contingent upon

the nature of the research problem and its fundamental objective and that there is not

a single, standard correct method of carrying out the research. He further stressed,

“The research method for a given problem is not like the solution to the problem in

algebra. It is more like a recipe for a beef stroganoff, there is no one best recipe”. (p-

4 in Churchill 1983).

45

Thus it is clear that the research design depends largely on the nature of the given

problem. The research design of this dissertation involves the use of multiple

research methods to address its different aims and objectives. The aims and

objectives that this dissertation has to achieve are as following:

1.To study whether the best performing Hospitality companies have clear

mission/vision statements as well.

2.To set up a criteria for evaluating the mission statements.

3.To determine the most popular themes of the mission statements of the best

performing Hospitality companies.

4. To determine the themes and components that the good mission statement should

carry in order to make one especially for a Hospitality business.

4.4 RESEARCH METHOD:

The primary aim of the research problem is to determine whether the best performing

Hospitality establishments have a clear Mission/Vision statement as well. By clarity of

the mission statements/vision, we mean whether the Mission/vision statements

contain all the essential components as per the academic literature available and

follow the set criteria, and also whether the Mission statements have some sort of

impact on the business performance as well. The Mission statements collected for

the purpose of studying were content analysed on the basis of set of components

considered necessary for the Mission statements.

The other aim of the dissertation is to determine the popular themes of the

Mission/Vision statements of the successful establishments. These popular themes

of the Mission statements of these establishments shall automatically help in

establishing the type of the Mission statements, which other Hospitality firms should

possess.

46

To address these aims multiple research methods shall be used. The Mission /Vision

statements shall be first content analysed for their content and the results shall be

correlated with the criteria chosen to indicate the Financial performance of the

Hospitality establishments (Table 3). Thus it is the both, qualitative and quantitative

research methods, which shall be used to use to address the aims, and objectives

set out for the dissertation.

4.5 CONTENT ANALYSIS: DEFINITION AND SCOPE

Krippendoroff (1980) explained that content analysis is useful as it seeks to

understand the data as a symbolic phenomenon and it is used to examine the

frequency of thematic and topical ideas. It lends itself well to examine the language in

written documents. The role of Content analysis as discussed by Neuman (1997), is

that it lets a researcher reveal the content (messages, meanings and symbols) in a

source of communication (book, article movie etc). He explained that the content

analysis lets the researcher discover content in a different way. This method allows

the researcher compare the content across many texts and analyse it with the

quantitative techniques like charts and tables. Also it allows the researcher to reveal

the aspects of the texts contents that are difficult to see.

In the area of the Mission statements, most of the work done has been on the basis

of the content analysis. Table (3), analysis the work done on the Mission statements

and the research methodology used for the purpose. Strong (1997), explained that

this is a useful technique for developing an objective, systematic, quantitative and

generalisable description of the Mission statements. Content analysing the Mission

statements involves, defining categories based on the researchers independent

judgement, and measuring the frequency of appearance of the categories, using

coding rules as developed by researchers and as recommended by Fearing (1954).

There are other examples where the content analysis was carried out on similar kind

of themes. Stevens (1997) used content analysis to evaluate twenty-six ethical codes

from the Hotels, which were selected from the Hotel and Travel Index and the

Directory of Hotels and Motels in the United States. Also in another kind of work on

47

the codes of ethics in tourism industry, Malloy and Fennel (1998) used content

analysis as a research tool. They content analysed 414 statements based on the

theoretical framework to discuss the general findings of their research. Thus the

suitability of content analysis for evaluating the Mission statements is justified as per

the existing evidence in the academic literature.

AUTHOR TITLE OF WORK METHODOLOGY

Strong (1997) How do organizations Content Analysis

define their Mission

_____________________________________________________________________

Jackson et al Mission Statements in Content Analysis

(1996) Service and Industrial

48

Corporations

_____________________________________________________________________

Bart (1997) Industrial Firms and Questionnaire design/

Power of Mission content analysis

_____________________________________________________________________

Bart (2001) Model of impact of Test of two Hypothesis/

Mission statements Questionnaire design

On firm performance

_____________________________________________________________________

Campbell and Mission&Business Content Analysis

Tawady (1996) Business Philosophy

____________________________________________________________________

Klemm et al Mission Statements: Determined value

(1991) Selling Corporate of Mission Statements

Values to employees (Questionnaire design)

_____________________________________________________________________

Zairi&Letza Corporate Reporting and Surveyed 200 European

(1994) Mission Statements: A companies based on

Missing Link framework consisting of

13 variables adopted from

US Malcolm Bridge

Criteria.

_____________________________________________________________________

Table (3): Example’s of Mission Statement Evaluation Methodologies

49

CHAPTER- 5

DATA ANALYSIS

___________________________________________________________________

5.1 AIMS AND OBJECTIVES:

The aim of this chapter is to establish the proper statistical tool for interpretation of

the data and to establish the kind of the relationship between the mission statement

score and the performance indicators. This is to test the assumptions about the

mission statements that they have a direct impact on the performance of the

businesses. For this purpose, the mission statement score shall be compared with

the performance indicators of the business, which were selected in the literature

review of the dissertation. The relationship of these performance indicators shall be

studied with the mission statement score on one to one basis.

5.2 CORRELATION:

To study the possible relationship between the various variables i:e mission

statement score and performance indicators (return on equity, net profit return and

annual turnover), the method chosen for this sort of data analysis was correlation

analysis. Correlation is a measure of the linear relationship between the variables

(Field2000). The two types of the correlation are bivariate and partial. While as the

bivariate correlation is the correlation between two variables, the partial correlation is

the study between the two variables while controlling the effect of one or more

variables. The data analysis required for this dissertation involves the study

relationship between the mission statement score or the quality of the mission

statement with the performance indicators return on equity, net profit margin and

annual turn over. The relationship of these performance indicators shall be studied

on the individual basis with the mission statement score.

The most suitable method to study this relationship is the bivariate correlation. This

type of data analysis involves the drawing of the scatter plot graph to understand the

50

type of the relationship between the two variables. Also, it tells about the type of the

relationship between the variables, whether any case is markedly different from the

other especially the ones which differ substantially from the others. This is to

eradicate the biased correlation coefficient. The relationship can be either that the

variables are directly proportional which signifies the positive correlation, inversely

proportional, which signifies the negative correlation or the relationship between the

variables can be independent of each other signifying zero correlation (Field 2000).

The scatter plot graph of the data can be observed in Fig (6). The next stage of

analysis involves the conducting the correlation. The bivariate correlation was

conducted (as there are two variables) using SPSS software. Since the data to be

analysed is parametric, therefore Pearson‟s product –moment correlation coefficient

was chosen instead of Spearman and Kendall‟s correlation. Further, since there is a

direct Hypothesis as what was discussed in the Literature review that the Mission

statements have a direct and positive impact on the performance on the business,

therefore one tailed test was chosen as the option for test of significance.

51

5.3 SCATTERPLOT GRAPH OF MISSION STATEMENT SCORE AGAINST PERFORMANCE INDICATORS

_____________________________________________________________________

Mission Statement Score

121086420-2

Re

turn

on

Eq

uity-5

Yr

Ave

rag

e

50

40

30

20

10

0

-10

-20

MISSION STATEMENT SCORE

121086420-2

RO

E-T

TM

40

20

0

-20

-40

-60

-80

Mission Statement Score

121086420-2

Sa

les/A

nn

ua

l T

urn

ove

r

12000

10000

8000

6000

4000

2000

0

Mission Statement Score

121086420-2

Ne

t P

rofit M

argin

20

10

0

-10

52

Correlations

1.000 .388*

. .041

21 21

.388* 1.000

.041 .

21 21

Pearson Correlation

Sig. (1-tailed)

N

Pearson Correlation

Sig. (1-tailed)

N

Mission Statement Score

Sales

Mission

Statement

Score Sales

Correlation is signif icant at the 0.05 level (1-tailed).*.

5.4 CORRELATION ANALYSIS USING SPSS SOFTWARE

______________________________________________________________

Correlations

1.000 .198

. .208

21 19

.198 1.000

.208 .

19 19

Pearson Correlation

Sig. (1-tailed)

N

Pearson Correlation

Sig. (1-tailed)

N

Mission Statement Score

Return on Equity -TTM

Mission

Statement

Score

Return on

Equity -TTM

Table5 (a)

Correlations

1.000 -.063

. .397

21 20

-.063 1.000

.397 .

20 20

Pearson Correlation

Sig. (1-tailed)

N

Pearson Correlation

Sig. (1-tailed)

N

Mission Statement Score

Return on Equity

Mission

Statement

Score

Return on

Equity

Table5 (b)

Correlations

1.000 .356

. .057

21 21

.356 1.000

.057 .

21 21

Pearson Correlation

Sig. (1-tailed)

N

Pearson Correlation

Sig. (1-tailed)

N

Mission Statement Score

Net Prof it Margin

Mission

Statement

Score

Net Prof it

Margin

Table5(c)

53

RESULTS AND DISCUSSIONS

6.1 AIMS AND OBJECTIVES:

This chapter aims at interpreting the data analysis that was done by using SPSS

software. Also the results from another research method, content analysis shall be

interpreted and discussed in this chapter. The aims and objectives as a whole set for

the dissertation shall be answered in this section as well. Also, constrains of the

dissertation are pointed out and finally the suggestions are made for the further

research.

6.2 SCATTER PLOT GRAPH:

The scatter plot diagram Fig (6), shows the justification of the relationship established

between the variables. The main purpose of the Scatter plot graph is to identify the

outliers that are those points, which lie outside the main trend of the data. In case of

Fig 6(a), which examines the relationship between the Mission Statement score and

Return on Equity (5yr Average), the outliers in the data pattern can be observed as

well (X=0, Y=20). Outliers like these can cause significant changes in the

interpretation in the actual outcome. However

in the four scatter plot graphs, four outliers were identified. However, in spite of

testing the correlation between the variables without these outliers, no significant

change in the outcome was observed.

6.3 CORRELATION ANALYSIS:

The correlation analysis of the data (Pearson‟s product moment-one tail) between the

mission statement score and the performance indicators was carried out using SPSS

software. Table 5 shows the statistical results obtained when the correlation of the

Mission statement score and performance indicators was conducted. Table 5(a & b)

54

explains the degree of correlation between the return on equity of trailing twelve

months and 5year average.

The mission statement score showed no particular correlation with return on

equities, trailing twelve months and 5yr average as well. In both of the cases, though

the correlation coefficient r=0.198 and r=-0.063, but the significance value of this

coefficient is not fluke or near to zero (p<0.001) which could have established any

relationship between the two. The significance of the actual probability is p=0.208

and p= 0.397 for trailing twelve months and 5yr average respectively which is

obviously much greater p>0.001.

Thus it is established clearly that the correlation result between mission statement

score and return on equity is not of any particular significance to establish some

conclusion. The reason for studying both was to maintain the authenticity of the data.

Many researchers using the five-year average return on the equity figures generally

delete the negative figures of some particular year if they find some. However, in this

case all the figures were analysed without selection or deletion to remove any

possible bias from the data interpretation.

The results from the correlation analysis between mission statement score and net

profit margin also showed no particular relationship. The correlation coefficient

between the two is r= 0.356 which seems positive obviously but the significance of

this correlation is p=0.57 which also is much higher p>0.001. Thus the net profit

margin as well showed no obvious correlation with the mission statement score.

However the mission statement score showed the significant correlation with the

annual turn over of the companies. The correlation coefficient r=0.388 and the

significance of this probability is less then 0.05 which is the acceptable probability

value for the social scientists. In this case p=0.041 obviously much lesser than the

acceptable value, p<0.05.Thus it is very much clear that there is a positive correlation

between one of the performance indicators if not with all of them.

55

6.4 CONTENT ANALYSIS: From the content analysis, the descriptive list of the

components of the mission statements of the Hospitality firms was prepared. About

twenty-eight components of such components were identified:

MISSION STATEMENT COMPONENTS

1. to be the best company

2. to provide the best customer service

3. to be the best employer

4. to deliver the operational excellence

5. to achieve profitable growth

6. to invest in technology and innovation

7. to seek the new markets

8. to strengthen the brand

9. to exceed the expectations

10. to empower through training and accountability

11. to improve the balanced scorecard

12. to recognise the values

13. to be the quality leader

14. to use freshly made products

15. to achieve the consistent excellence

16. to satisfy internal and external customer

17. to serve all the stakeholders

18. to maximise the value of each shareholder

19. to build on the strengths

20. to enrich the lifestyles

21. to anticipate the needs

22. to provide the great work environment

23. to treat each other with respect and dignity

24. to embrace the diversity

25. to contribute positively to our customers

26. to instil the environmental responsibility

27. to provide the memorable experience

28. to be the easiest company to do business with

56

The frequency of the most popular themes of the mission statements of the best

performing Hospitality establishments is shown below in the chart:

COMPONENT FREQUENCY

CUSTOMER FOCUS 95%

COMMUNICATION 90%

SURVIVAL 86%

VALUES 86%

EMPLOYEE CARE 76%

QUALITY/INNOVATION 71%

PUBLIC IMAGE 67%

BUSINESS 62%

LOCATION 43%

SELF CONCEPT 33%

Table (6)

Thus it is clear that the components identified from the literature review for the

purpose of the study and analysis of the mission statements are thoroughly been

utilised in the best Hospitality firms. These components can be utilised by other

Hospitality establishments who want to have a mission statement. If these

components are not the prescription, but at least can they be a very good starting

point to develop one. The importance of these components was discussed in the

literature review of the dissertation and it is clear from the analysis that they are

highly in use in the mission statements of the best of the Hospitality firms. These

components address the most important issues and incorporating them in the

mission statements can ensure that the businesses have a clear aim ahead.

57

COMPONENT EUROPEAN

COMPANIES

US COMPANIES HOSPITALITY

INDUSTRY

CUSTOMER

FOCUS

55% 82% 95%

PRODUCT

QUALITY

75% 76% 71%

MARKET

LEADERSHIP

45% 70% 90%

EMPLOYEE

CARE

35% 45% 76%

Table (7)

Table 7 shows the comparison of some of the mission statement components of the

Hospitality Industry with the European and US companies*(Total Research 1999).

The Hospitality Industry is clearly more customer & employee focussed. The

Hospitality Industry is more focussed on market leadership as well.

6.5 MISSION STATEMENT COMPONENT’S & PERFORMANCE INDICATORS:

The component analysis showed different trends within the different performance

indicators and when compared with the over all list (Table6). The top ten listing of the

companies in terms of return on equity, net profit margin and annual return showed

that the frequency of some components varied to a greater extent with each other

and with the over all score. The components in the different categories showed the

following trend:

58

COMPONENT TOP TEN COMPANIES

(FREQUENCY OF COMPONENTS)

OVERALL

NPM

ROE

SALES

BUSINESS 70% 70% 60% 95% COMMUNICATION 90% 90% 100% 90% CUSTOMER FOCUS 90% 90% 100% 86%

EMPLOYEES CARE 80% 70% 90% 86%

VALUES 90% 80% 90% 76%

SURVIVAL 80% 80% 100% 71%

PUBLIC IMAGE 80% 70% 90% 67%

PRODUCT QUALITY 40% 60% 60% 62%

LOCATION 40% 40% 30% 43%

SELF CONCEPT 90% 80% 90% 33%

Table (8)

The remarkable difference that can be drawn from the list is that the best of the top

ten companies are remarkably short of the Business component as compared with

the over all list. The top ten companies excel in the self-concept and Public image

component remarkably.

6.6 DISSERTATION CONSTRAINTS / RECOMMENDATIONS FOR FURTHER

RESEARCH:

Keeping in view the restricted length of the dissertation, it was not possible to explore

all the areas related to the topic. The dissertation provides the straightforward

answers to the aims and objectives set for it in the beginning. However, there are

many issues related to the research problem that can be addressed in the future

work. The dissertation aims at analysis of the Hospitality Industry in general and

included the Hotel chains, Restaurant chains, Fast food establishments etc. The

strategies of all these establishments differ remarkably from one another in many

59

aspects, even though there are many similarities as well. The future work on the

related topic can address the issue of the mission statements of these

establishments separately and can be compared to each other for a much broader

picture of the industry. Also, the European and American Hospitality companies can

be studied separately to see the difference in their outlook.

How and who in the Hospitality Industry makes the mission statements can provide

some interesting facts. The subsequent study can also explore how in actual

practice, the mission statements are actually followed up in practice by the

companies. The areas where the mission statements have a positive impact on the

company performance in the Hospitality Industry can provide a extremely useful

answers as well.

The components of the mission statements that were identified for the purpose of

analysis were selected from the discussion in the Literature review of the

dissertation. These components were frequently discussed by the researchers and

considered important as well. The ten components identified were:

1.BUSINESS: Whether the Mission Statement defines the company business.

2.COMMUNICATION: Communication about where the company is and where it is

heading.

3.CUSTOMER FOCUS: Whether the Mission statement carries the concern for customers.

4.EMPLOYEES CARE: Whether the Mission Statement carry the concern for employees as

well.

5.VALUES: The philosophy about which all the employees feel proud of.

6.SURVIVAL: Firms Concern for the surviving and Growth

7. PUBLIC IMAGE: Desire to be the jewel in the Industry and society as well.

8.PRODUCT /SERVICE EXCELLENCE: Firms concern for product /service quality and

innovation.

9.LOCATION: Markets where the company competes.

10.SELF-CONCEPT: What are the firm’s major strengths and competitive advantage.

The Mission statement‟s were thus analysed and marked on the basis of availability

of these components. For each component available in the Mission Statement, one

marks was awarded. The total score of Mission statement was calculated on the

60

basis of number of the available components. The score of the Mission statement

determine the quality of the Mission statement. The possible correlation between the

quality of mission statement and the firm‟s performance on the basis of its return of

equity was studied by using SPSS software.

7.0 BIBLIOGRAPHY:

Abell, D.F(1980) ., Defining the Business., The Starting Point of the Strategic Planning., Prentic -Hall, Englewood Cliff, NJ.

Ackoff, R.L. (1986), Management in Small Doses, Wiley, NY. Adams, Scott (1996), Dilbert Principle, Macmillan Publishers, London.

Agrenti, John & Campbell, Andrew(1997), Stakeholders: The Case Against., Stakeholders: The Case For., Long Range Planning, Vol 30, No 3., pp442-45, 446-449. Allen, Richard.J and Kilmann, Ralph. S (2001). The role of the reward system for a total quality management based strategy., Journal of Organizational Change Management, Vol 14 Issue 2 .

Alaxander, N and Lockwood, A.(1996), “Internationalisation : a comparison of Hotel

and retail sectors”, Service Industry Journal, Vol 16, No 4, pp458-73.

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