Strategic Planning in the Small Business

Unit 3

HO 3-3

(continued)

THE PARTS

OF A MISSION

STATEMENT

The mission statement

contains two major

elements. Each is

important and should

be given

careful consideration.

The Nature of the

Business

The first element

of the mission statement

defines and clearly

specifies the nature

of the firm's

basic

business. Four different

areas of concern

must be considered when

describing the nature

of the business.

The first area highlights

the industry and product

line the company

deals with,

and the type of

services that are provided.

The second

area considers where

the firm is in the

total distributioa

channel. For

example, the company

may be a wholesaler,

a manufacturer, a

retailer, or a

mail order store. The

third area of concern

suggests whether

the prime goals of

the firm are quality,

breadth of product

line, price, or service.

The fourth area

identifies the

targetmarket.

Who are the customers

that the firm presently

serves and who

do we intend to

serve in the relevant

planning horizon?

Here, the planners should

identify all distinct

customer

groups

that will be served.

Although

the mission statement

tells rather explicitd.

what the firm

is, it is equally important

that

the mission

implicitly tells what

the firm is not.

This limiting statement

controls the general

direction

of the firm. The

mission statement serves

more or less

as the fences on each side

of

a

highway.

Consider

the following

example. A woman decides

to start a bicycle

shop that sells and services

bicycles. After

a few months,

she is offered the

opportunity to add

a line of mopeds.

Reasoning

that mopeds are simply

bicycles with

a small motor, she adds

the line. Later, the

regional manager

of Honda motorcycles

stops by. It seems

that the local dealer

for Honda is

retiring,

and this would be a

once in a lifetime opportunity

to land a coveted

Honda dealership.

Now,

she has a bicycle,

moped, motorcycle

business. Somewhat

later, the entrepreneur

is

presented

the opportunity

to take on a line of

snowmobiles. Reasoning

that snowmobiles

really

have much in common

with motorcycles,

except that they

run primarily on skis

instead of

wheels, she adds them

too. The story could

be continued indefinitely,

adding garden

tractors,

lawnmowers,

snow blowers,

etc. But the point

is that the one-time

bicycle shop has

now

become

a highly diversified

dealership for a number

of slightly related

products. !n the process,

the owner has

overextended herself,

not being able to

do any of it well; hs

likely incurred

substantial

debt; and has, in general,

lost control of

her operation.

A well

written and observed

mission statement

woud allow the owner

to specialize in bicycles

until she decided

it was time to expand.

At that time she

could carefully evaluate

the market

and her fi.-, zial capabilities
to take on
an added line. Any lines
that were added could
be done

so at a controlled rate

and with adequate

financing.

Many hisinesses,
large and small,
fail because of rapid,
uncontrolled growth.
For example,

large businesses often
acquire other unrelated
firms with the
stated goal of broadening
their

earnings
base, gaining a
counter cyclical business,
or moving into
new growth businesses.
Later

many
of these same subsidiaries
are divested as
the parent firm's executives
state that they
are,

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