AN ANALYSIS OF THE MISSION STATEMENTS OF SELECTED BANGLADESHI COMPANIES. Dewan Mahboob Hossain. University of Dhaka. Bangladesh

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1 AN ANALYSIS OF THE MISSION STATEMENTS OF SELECTED BANGLADESHI COMPANIES Dewan Mahboob Hossain University of Dhaka Bangladesh Published in: Journal of Business Research (ISSN ), Vol.6, Electronic copy available at:

2 AN ANALYSIS OF THE MISSION STATEMENTS OF BANGLADESHI COMPANIES Abstract: This study focuses on the mission statements of Bangladeshi companies. Fifteen companies were selected through convenient sampling and the characteristics of their mission statements were evaluated according to the criteria given by Fred R. David. By evaluating these mission statements a conclusion was drawn that the Bangladeshi companies are preparing their mission statements without knowing the basic characteristics that mission statements should possess. Corporate Mission: According to Peter Drucker (1973), A business is not defined by its name, statues, or articles of incorporation. It is defined by the business mission. Only a clear definition of mission and purpose of the organization makes possible clear and realistic business objectives. The mission of an organization defines its business. For example, a food manufacturing company s mission is to produce food products, a petroleum company s mission is to supply fuel in the market, a university s mission is to provide tertiary level education to its students and a software company s mission is to make software. Peter Drucker says, asking the question What is our business? is similar to asking the question What is our mission? But there are some people who think that the definition of mission should not be that simple. It should contain some other components that will be acting as guidelines for strategic management. Defining a clear mission for the business is very important for setting future strategies of the business. Campbell, Devine and Young (1993), in their famous book called A Sense of Mission has quoted from the speech of Colin Marshall (Deputy Chairman, British Airways) that, A corporate mission is much more than good intentions and fine ideas. It represents the framework for the entire business, the values which drive the company and the belief that the company has in itself and what it can achieve. Setting a clear and well-defined mission is the very first step of strategic management (David, 1999). Through defining the business, the mission helps to set the long-term objectives of an organization and basing on those long-term objectives, strategies can be set. 2 Electronic copy available at:

3 Different schools of thought have defined mission in different ways. Some of them described mission as a strategic tool and some of them argued that mission should be stated in terms of philosophy and ethics (Campbell, et al, 1993). If both of these thoughts are analyzed, it becomes conspicuous that the first school of thought (defining mission as a strategic tool) is more concerned with the survival of an organization as a business concern and the second school of thought (defining mission in terms of philosophy and ethics) is more concerned with seeing the organization as a social unit and thus they dealt with social emotions. There is no doubt that each of these views has its own importance. The world of business is becoming more and more competitive and in order to survive in this competitive environment, proper strategic management is very important. As a strategic tool, a mission can help in this purpose. On the other hand, it is also true that modern society presents business with immensely complicated problems it did not have formerly (Davis, 1975). There is no doubt that business is a social unit and in order to exist and survive in the society it has to respect the ethical values of the society. It is said that, today a business lives in a Glass House and that is why business has greater Public Visibility (The extent that an organization s activities are known to persons outside the organization) in comparison to other institutions in the society (Davis, 1975). Society is very much alert to know the activities of the business. The growing popularity of social welfare is also compelling the business to perform some social responsibilities. The concept of Corporate Social Responsibility (CSR) is a burning question in today s world. So, as these both views are very important, it is better to set a corporate mission incorporating both these issues and that will help the organization to set proper goals and then set the strategies according to that goals. Campbell, et al (1993) suggested that a mission should have the following four components: 1. Purpose: Why the company exists? 2. Strategy: The competitive position and distinctive competence. 3

4 3. Standards and Behaviors: The policies and behaviour patterns that underpin the distinctive competence and the value system. 4. Values: What the company believes in. The mission of the company should be well communicated to the stakeholders of the company and the medium of this communication is a mission statement. Mission Statement: A mission statement is a clearly written statement that communicates about the mission of the organization to several parties related to that particular organization. These parties include employees, strategists, customers, investors and others who have any relationship with the affairs of the organization. A clear mission statement is essential in order to establish effective objectives and to formulate strategies (David, 1999). Mission statements can be communicated through several media like the annual reports of the company, several internal reports, leaflets etc. An example of a mission statement is given in Appendix-2. According to McGinnis (1981), a mission statement should: 1. Define what the organization is and what the organization aspires to be, 2. Be limited enough to exclude some ventures and broad enough to allow for creative growth, 3. Distinguish a given organization from all others, 4. Serve as a framework for evaluating both current and prospective activities, and 5. Be stated in terms of sufficiently clear to be widely understood throughout the organization. There is no particular length or format of a mission statement. It differs from organization to organization. It can also be said that there is no specificity about the components of the mission statements. Several authors have identified several different numbers of components that should be present in a good mission statement. 4

5 Components of mission statements suggested by Fred R. David: Though David (1999) admits that mission statements can differ in length, content, format and specificity, he suggested the following components to be present in a mission statement: 1. Customers: Who are the firm s customers? 2. Products or services: What are the firm s major products and services? 3. Markets: Geographically, where does the firm compete? 4. Technology: Is the firm technologically current? 5. Concern for survival, growth and profitability: Is the firm committed to growth and financial soundness? 6. Philosophy: What are the basic beliefs, values, aspirations and ethical priorities of the firm? 7. Self-concept: What is the firm s distinct competence or major competitive advantage? 8. Concern for public image: Is the firm responsive to social community and environmental concern? 9. Concern for employees: Are employees valuable assets of the firm? It is very much visible that in his suggested mission statement components, David tried to cover both the views of considering mission statement as a strategic tool and including ethics and philosophies in it. Objective and methodology of the study: The objective of this study is to identify whether the mission statements of Bangladeshi companies contain these components suggested by David. David s components were selected as a standard as these components include both strategic and ethical views. In order to assess the mission statements of Bangladeshi companies, 15 companies were taken as a sample through convenient sampling. Actually, 63 annual reports of different companies were collected and out of which in 15 annual reports, mission statements were found. Then the mission statement of each of these companies was analyzed in order to identify whether it covers the several components of 5

6 mission statements suggested by Fred R. David. This analysis was done through a table shown in Appendix 1. Findings: According to the criteria suggested by Fred R. David, the following are the findings: 1. Customers: Only 2 companies out of these 15 companies (13.33%) have mentioned about their customers in the mission statement. But one of them could not define its customers specifically in their mission statements. For example, the mission statement of The City Bank Limited is: To enjoy the trust and confidence of customers through cultivation of relationship banking. In this particular statement, they have just mentioned about their customers and did not define who are they. But the other company, Uttara Finance and Investment Limited could define their customers specifically : To provide lease finance to professionals and technicians on attractive terms. 2. Products or Services: Four companies (26.67%) mentioned about their product or services in the mission statements. These companies mentioned their products or services specifically. We can take two examples among these companies: Anlima Yarn Dying Limited and Uttara Finance and Investment Limited: Anlima Yarn Dying Limited: To strive hard to be a provider of world class textile and garment products and services. Uttara Finance and Investments Limited: To provide lease finance to professionals and technicians in attractive terms. 3. Market: Three companies (20%) mentioned about their markets. As per the suggestion of David, the firm should state clearly the geographic area in which it competes. Both ACI Limited and Southeast Bank Limited stated clearly that they perform their business in Bangladesh. Anlima Yarn Dying Limited has mentioned that they compete in International 6

7 Market. But they did not define the international market or in other words they did not mention in which countries they are dealing with their products. 4. Technology: Four companies (26.67%) mentioned about their technology. For example, Southeast Bank, in their mission statement mentioned that they provide high quality financial services with the help of latest technology. Square Textiles Limited mentioned about technology by saying Our mission is always try hard to remain in winning position by applying advanced technology.. 5. Concern for survival, growth and profitability: Three companies (20%) mentioned about their concern for survival, growth and profitability. For example, Uttatra Finance and Investments Limited mentioned that their mission is To provide quality services and ensure steady growth of the company. Southeast Bank mentioned their mission as Balanced growth strategy and Steady return on shareholders equity. Square Textiles Limited says they will..always strive hard to remain in winning position by.. producing quality products.. 6. Philosophy: Only three of the companies (20%) have mentioned about their philosophy of business. Square textiles Limited has mentioned about their belief on stringent ethical practice. Southeast Bank Limited also mentioned about their High standard business ethics. Mark Bangladesh Shilpa and Engineering Limited has mentioned a completely different mission statement like The Holy Quran forms the basis of all our activities. We believe in honest earning, fair practice and economic, efficient and effective production. 7. Concern for public image: 14 companies (93.33%) companies have mentioned about their concern for public image. For example, Southeast Bank Limited mentioned about their Deep commitment to the society and growth of national economy. ACI Limited says, ACI mission is to play leading role in enhancing the quality of life and well being of the people of Bangladesh. 7

8 8. Self-concept: Out of 15 companies in the sample, no one company mentioned their selfconcept, in other words, they did not mention their competitive advantage. 9. Concern about employees: Fourteen companies (93.33%) have mentioned about their concern about employees. For instance, Uttara Finance and Investments Limited mentioned: to ensure human resource development to meet the challenges of the time. Southeast Bank Limited mentioned that there mission is to attract and retain quality human resource. Some other issues: 1. Shinepukur Holdings Limited, Beximco Textiles Limited, Beximco Pharmaceuticals Limited, Beximco Infusions Ltd., Bangladesh Online Limited, Beximco Denims Limited and Padma Textile Mills have the same mission statement without mentioning their products and services. Though it can be said that all these companies are from the same business group BEXIMCO, but there is no doubt that their products are different. So, it can be said that the mission statements of these companies failed to define their businesses as every company should have a unique mission statement (McGinnis,1981). 2. Advanced Chemical Industries Limited did not mention their customers specifically but they mentioned that they are working for.the well being of the people of Bangladesh. 3. Singer Bangladesh Limited indirectly mentioned about their products saying that Our mission is to improve the quality of life of people by providing comforts and conveniences. Conclusion: From the findings of this study a conclusion can be drawn that Bangladeshi companies are preparing their mission statements mostly in terms of 'philosophy and ethics. Out of 15 companies, 14 companies have included their concern for public image in the mission statements. 8

9 But in respect of using the mission statement as a strategic tool, they are not successful. Campbell, et al (1993) said that, Many managers misunderstand the nature and importance of mission, while others fail to consider it at all. In case of Bangladesh, it is also true. Bangladeshi managers are preparing the mission statements not understanding its real use. Peter Drucker (1973) observed that, That business purpose and business mission are so rarely given adequate thought is perhaps the most common cause of business frustration and failure. Bangladeshi companies are showing their mission statements in the annual reports just to make it attractive to the public. The kind of mission statements that are prepared by most of them cannot give any guideline for strategic management. 9

10 References: Campbell, A., Devine, M. and Young, D. (1993), A Sense of Mission, Pitman Publishing, London. David, F. R Strategic Management: Concepts and Cases, 7 th Edition, Prentice Hall International, Inc., New Jersy. Davis, K., 1975, Business and Society: Environment and Responsibility, 3 rd Edition, McGraw- Hill Book Company, NY. Drucker, P. F Management: Task, Responsibilities and Practices, Harper & Row, New York. Ghosh, A Strategic Management Concepts and Issues, Books and Allied (P) Ltd., Calcutta. Gratton, L Implementing a Strategic Vision Key Factors for Success, Long Range Planning, Vol: 29 (June): McGinnis, V.,1981, The Mission Statement: A key Step in Strategic Planning, Business, Nov.- Dec., pp

11 Appendix-1: Table: 1 Components covered in the mission statements of different companies Concern for Products or survival, Concern for Name of the company Customers Markets Technology Philosophy Self-concept Services growth and public image profitability Mark Bangladesh Shilpa and Concern for employees N N N N N Y N N N Engineering Limited Beximco Denims Limited N N N N N N Y N Y Bangladesh Online Limited N N N N N N Y N Y Southeast Bank Limited N Y Y Y Y Y Y N Y Beximco Infusions Limited N N N N N N Y N Y Beximco Pharmaceuticals N N N N N N Y N Y Limited Beximco Textiles Limited N N N N N N Y N Y Padma Textile Mills Limited N N N N N N Y N Y Advanced Chemical N N Y Y N N Y N Y Industries Limited Singer Bangladesh Limited N N N N N N Y N Y Shinepukur Holdings Limited N N N N N N Y N Y Anlima Yarn Dyeing Limited N Y Y N N N Y N Y Square Textiles Limited N N N Y Y Y Y N Y The City Bank Limited Y Y N N N N Y N Y Uttara Finance and Investments Limited Y Y N Y Y N Y N Y Y indicates that the companies have mentioned this component in their mission statements. N indicates that the companies have not mentioned this component in their mission statements. 11

12 Appendix- 2: Example of Mission Statement: Mission Statement of American Telephone and Telegraph (AT & T) [taken from Ghosh,2001]: 1. To strengthen and enhance the profitability and market position of the company s core business. The core businesses include: Domestic long-distance services; The design, manufacture and sale of network communications equipment for operating companies; The design, manufacture and sale of custom-premises telecommunications equipment, which includes stand-alone computers as well as component computers in our in our information systems. 2. To build on AT&T s strength and reputation to bring a new generation of data networking solutions to the customers. 3. To establish a major position in the international market for information movement and management. To accomplish this we will pursue overseas partners that are established in the information industry. 12