The most common initial act in establishing organizational direction is determining an organizational mission. Organizational mission is the purpose for which—the reason why—an organization exists. In general, the firm’s organizational mission reflects such information as what types of products or services it produces, who its customers tend to be, and what important values it holds. An organizational mission is a broad statement of organizational direction and is based on a thorough analysis of information generated through environmental analysis.¹⁷

A mission statement is a written document developed by management, normally based on input by managers as well as nonmanagers, that describes and explains the mission of the organization.¹⁸ The mission is expressed in writing to ensure that all organization members have easy access to it and thoroughly understand exactly what the organization is trying to accomplish.

An organizational mission is important to an organization because it helps increase the probability that the organization will be successful. There are several reasons why it does this. First, the existence of an organizational mission helps management direct human effort in a common direction. The mission makes explicit the major targets the organization is trying to reach and helps managers keep these targets in mind as they make decisions. Second, an organizational mission serves as a sound rationale for allocating resources. A properly developed mission statement gives managers general, but useful, guidelines about how resources should be used to best accomplish organizational purpose. Third, a mission statement helps management define broad but important work areas within an organization and therefore the critical jobs that must be accomplished.¹⁹

Organizational objectives were defined in Chapter 5 as the targets toward which the open management system is directed. Sound organizational objectives reflect and flow naturally from the purpose of the organization, which is expressed in its mission statement. As a result, useful organizational objectives must reflect and flow naturally from an organizational mission, which in turn was designed to reflect and flow naturally from the results of an environmental analysis.²⁰