Elasticity of the Airline Industry

INTRODUCTION

In 1973 Peter Drucker wrote that “mission and philosophy is the key starting point in business” and claimed that the lack of thought and attention given to them as the cause of many frustrations and failures in business.

Subsequently Pearce (1982), David (1989), Campbell and Tawadey (1990) and others developed a body of knowledge on mission statements as a strategic tool essential for good management practice.

The Ashridge model:

MAINTAINING A CORPORATE FOCUS

mission statement is a powerful instrument which can significantly influence the actions of an organisation

Campbell and Tawadey (1990) put the mission statement into

the context of a mission model, entitled "The Ashridge

Mission Model", which comprises four elements:

*Purpose describes why the organisation exists

*Strategy focuses on how the purpose might be achieved

*Values are what the organisation cherishes and believes in

*Behaviour standards are the policies and patterns existing

within the organisation which guide and colour how it operates

*key issues are whether such elements have been addressed and

whether the organisation's stance is clearly understood by

all employees

* Strong links between the four elements will result in a

strong mission

During the 1990s attitudes to company mission statements were generally positive with more companies using them and academics and consultants engaged in defining and evaluating them. Most of this was within the context of strategic management since mission and vision form a “framework within which strategising takes place” (Eden and Ackerman 1998) leading to the mission as a statement of strategic intent.

Leading management authors advised that corporate headquarters draw up business plans which include broad statements of mission and strategy (Kotler 1991, Kay 1993, Lynch 2000, Thompson 2001). There were numerous definitions and categorisations of mission statements (Jauch and Glueck 1988, Johnson and Scholes 1999, De Wit and Meyer 1994, Barrow et al. 2001), but little discussion, still less empirical evidence, of how mission statements are used, by whom and their impact on performance.

Research since 2000 has attempted to remedy the deficiency in the mission statement literature and to establish a link between mission statements and performance. Bart and Baetz’s (1998) in-depth study showed that the presence of mission statements was not automatically associated with superior company performance. Where internal performance and resource allocation measures were aligned with the mission there was a significant and positive correlation between mission and performance.

Main:

Two thirds of responding organisations with more than 5000 employees had a mission statement compared with only 40% of smaller companies (klemm and redfearn 2004)

The majority (80.7%) of the people involved in compiling mission statements in UK companies were of director grade and above. Non- management employees account for only 4.8% of the personnel involved, with shareholders accounting for only 1% (Table 2). These results confirm the findings of Klemm et al. (1991) and Rigby (1998) that compiling the mission statement in a plc is a top-down process, generally the preserve of the most senior managers.

One reason that mission statements are so popular even though there is no direct evidence that they do any good is that there is no direct evidence that they do any good. In other words, companies adopt them . . .

. . . because no one can prove that they don't work. So what if you can't prove that mission statements have any direct effect on the bottom line--it's hard to prove that anything a company does has a direct effect on the bottom line. Even operating performance can be only tenuously linked to financial performance, in the opinion of many experts.

Mike Lovdal is vice president of Mercer Management Consulting Inc., which has surveyed hundreds of companies in this