A mission statement refers to that statement that defines the purpose for which the company has come into existence. It basically outlines the organization’s values, objectives, and the specialization or USP of the company. A mission statement often acts as a guiding principle as far as the working of the company is concerned besides it can be used as a benchmark for measuring the company’s performance. The mission statement is a part of the vision statement of the company which is a much broader term and has other things apart from the mission statement. Let’s look at some of the important elements of the mission statement –
Elements of Mission Statement
Purpose of Mission Statement
The purpose is one of the most important elements of the mission statement. This basically means the reason or purpose for which the company has come into existence.
Values
This element basically gives an idea about the principles or values with which the company conducts its work as well as the values that the company expects from its employees and other parties which are dealing with the company.
Customers
This element explains the type of customers that the company is targeting or willing to serve. Hence for example a toy-making company’s target customers would be small kids while a bee or wine-producing company’s target customers would be young people aged between 20 to 40 years.
Products or Services
This element explains the products or services which the company plans to offer to its customers. Hence an FMCG company’s purpose is to sell daily-use products while a Heavy goods company’s purpose is to sell heavy machines and parts to industries. Similarly, an insurance company will sell products related to insurance while a mutual fund company will sell products related to mutual funds.
Markets
This element describes the markets in which the company is planning to operate, hence some companies operate in a few cities or locally while some companies operate in the whole country and there are companies that operate in several countries also known as multinational companies.
Goals of Mission Statement
Every promoter starts a company with a fixed goal in his or her mind and the mission statement contains that goal or objective of the promoter which can be of great help to an investor or an analyst in determining where the company is headed in the next few years.
Strategy
In the case of business, a company will not be successful if does not have the proper strategy in place which will have clearly set out goals and objectives of the company along with a plan of action so as to achieve those goals or objectives. Hence while some companies have an aggressive business strategy where they do aggressive investments in business and do marketing while some companies tend to have a conservative business strategy where they gradually increase the investment in business rather than doing big investments upfront.
Competitive Advantage
This involves mentioning the competitive advantage that the company enjoys over its competitors or in simple words it states the unique selling proposition also known as the USP of the company. Hence for example Nokia mobiles are known for their durability and Samsung or LG is known for its LCD panels.
Collaboration
Collaboration is another important element of the mission statement it basically implies the companies with which the company will like to enter into partnership as the business is all about strategic alliances and partnerships so as to take the company to the next level.
Social Responsibility
Another important element of the mission statement is the mention of the social responsibility activities which the company will be doing over the course of its business as part of its social responsibility towards society as well as the nation.
As one can see from the above the mission statement is an exhaustive document and that is the reason why many investors as well as analysts closely look at the mission statement of the company before going deep into the financial analysis of the company.