Corporate Mission Statement is the Difference
The D. H. Baldwin Company was a manufacturer of pianos from the 1890s to the 1960s. As a result of growing competition, especially from Japan, the company found itself in trouble. It discovered, however, that one lucrative part of its business was financing retail sales. This led the company to look at financial institutions as a new line of business in line with its mission. In 1968 it bought Empire Savings, Building & Loan Association, based in Denver. Today D. H. Baldwin is “a multi-bank music company” -and very prosperous. Refer G Steiner
Its mission statement reads as follows; “D. H. Baldwin Company is a diversified financial services holding company, with financial subsidiaries engaged in banking, savings and loan and insurance activities, and non-financial subsidiaries engaged in the manufacturing and merchandising of musical instruments”. Is there a difference?
On the other hand, some companies have changed their purpose and missions with disastrous results. Why this difference? Two giant corporations that altered their basic purpose and missions to include computers were General Electric and RCA, both of which eventually retreated after substantial losses. Rohr Industries was a profitable company making ready-to-install aircraft engine pods. In the late 1960s the company decided to make rail cars for the San Francisco Bay Area Rapid Transit System and in 1972 it won a contract to build cars for the Washing- ton Metropolitan Area Transit Authority. Both ventures were disasters and Rohr changed its purpose and mission again to eliminate these products and markets.
Two companies that faced the same environmental change but developed different purpose and mission to adjust to it are Gerber Products and Johnson & Johnson. What is the difference? For years Gerber Products said, “Babies are our only business.” Then around 1972 it took a look at the projected baby population, which was destined to level off and decline, and said that “babies are our business.” The company then proceeded to sell new products and services, such as baby clothing and insurance, to its old markets. Eventually the slogan was eliminated entirely. Johnson & Johnson, faced with the same environ- mental change, adopted a different strategy. It began to sell baby products to the adult population, who had used its products as babies.
Choosing the Right Purpose and mission
Whether a chosen purpose and mission is “right” or not can only be deter- mined after the decision is made. The determination of a purpose and mission is based on judgment. As Vickers said: “The value judgments of men and societies cannot be proved correct or incorrect; they can only be approved as right or condemned as wrong by the exercise of another value judgment.”7 Sometimes it may appear that facts “dictate” the logic of a purpose and mission but there is no way to be certain the conclusion is “right” or “wrong” until after the fact. Rohr’s purpose and mission change seemed logical at the time but events proved the change to be wrong.
Another case of misguided purpose and mission change was that of White Motor Corporation. In the mid-1950s White was a successful producer of heavy trucks. It was fearful of a takeover since its stock was selling at between $13 and $14 per share while the book value was $56. The company decided the best way to avoid being swallowed was to swallow. This led to an acquisition program that in the early 1970s led almost to bankruptcy. If the company had managed its acquisitions better, however, the change in purpose and mission might have been successful.Posted by ZuzukiSX4 Posted on 31 Dec
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