Authors Contacts

Jorge A. Vasconcellos e Sá
PhD Columbia University
Jean Monnet Professor at the University of Lisbon

Contacts: Alameda Combatentes Da Grande Guerra

Edifício S. José – 405
2750-326 Cascais
PORTUGAL
Tel. (351) 21 482 1544
Fax (351) 21 482 1566
Email: op102167d@mail.telepac.pt

Brief professional biography:

Jorge Alberto Souza de Vasconcellos e Sá has a PhD in Business Administration from

Columbia University in New York. At present he is Professor at the Technical
University. In 1997 he earned the Jean Monnet Chair, the high European Academic
Award.
Professor Vasconcellos has addressed conferences and given seminars at various
European universities including London Business School, IESE, Glasgow Business
School.
Has published fifteen books that have received endorsements, among others, from Peter
F. Drucker, Philip Kotler, Al Ries (author of the bestsellers Marketing Warfare and
Positioning), Don Hambrick (Professor at Columbia University and The Pennsylvania
State University), Karl Moore (Professor at Oxford and McGill University), Luiz
Moutinho (Professor at Glasgow University) and so on.
 Fátima Olão
Bachelor in Economics
Master in Financial Mathematics (current writing the thesis)

Contacts: Alameda Combatentes Da Grande Guerra

Edifício S. José – 405
2750-326 Cascais
PORTUGAL
Tel. (351) 21 482 1544
Fax (351) 21 482 1566
Email: nop4867@mail.telepac.pt

Magda Pereira
Bachelor in Management

Contacts: Alameda Combatentes Da Grande Guerra

Edifício S. José – 405
2750-326 Cascais
PORTUGAL
Tel. (351) 21 482 1544
Fax (351) 21 482 1566
Email: op102167@mail.telepac.pt
 FROM LEVITT TO THE GLOBAL AGE:

ONE MORE TIME, HOW DO WE DEFINE OUR BUSINESS?

August 2008 (Revised August 2010)

0. Abstract

Several works have focused on defining an organisation mission. Ansoff, Levitt

and Drucker, among others, have done seminal contributions.

But globalisation brought new challenges. Changes. Both in terms of new risks
and new opportunities.

Thus, the question: how does globalisation impact on how a firm should define its
business? What keeps on being valid, as before, and what must be adapted? And
why?

This article discusses the task of defining an organisation mission on a global age.
One of its main conclusions is that, more than ever, defining a business mission,
requires now that one incorporates location in the definition. Location includes
three different things: geographical area; distribution channels; and time location.

It may be seen paradoxical that as globalisation advances, location becomes more

important in a business definition. This article explains why.

Keywords: business, definition, mission, globalisation, advantage, and

differentiation.

2
I. Introduction

There are four main reasons, which make of defining an organisation’s business,
mission, a very important management tool.

First of all, it is important to have present, that an institution’s mission is never

obvious. Indeed, when defining a business, common expressions such as that
the institution intends to make money, obtain profits or grow are worthless.
They merely contribute to the dualism between theory and practice (Knights and
Mueller, 2004).

That is as useful as asking someone what it does in life and receiving the reply
that he/she tries to be happy. That is tautological. It adds nothing to what we
already know.

So, the sentence on business mission must answer clearly one basic question:
what does the organisation do to make a living?

By the same token, vague or tautological statements transmit nothing regarding

a given corporation. Except a bad image of management. Conveying the
message that they do not have a clue where they stand in the market, what their
business is.

Also, (Collis and Rukstad, 2008) companies that don´t have a simple and clear
statement of strategy are likely to tall into the category of those who either fail to
implement their strategy, or never even had one.

Indeed, with a clear definition of the elements a company mission must include,
two things happen: formulation becomes easier since executives know what they
are trying to create; and implementation becomes simpler because the strategy’s
essence can be readily communicated and easily grasped by everyone in the
company.

3
Second, even when they are not vague, but specific, concrete (in terms of
indicating a company market position), most mission statements are suboptimal
since they contain unnecessary elements and omit necessary ones. This is highly
prejudicial, since – as shall be seen - a well-defined mission will help in the
formulation of four elements: 1) the objectives through which the company will
be assessed; 2) a clear assessment of the company’s most important competitors;
3) the selection of the appropriate tactics in marketing; and 4) finally, will open
the company to market opportunities. The first and seminal work here is that of
Levitt, in 1960.

The third reason why the definition of a mission is never obvious is that a small
alteration in it is capable of totally changing the prospects of the company. In
such instances, strategy can become a mechanism of power (Ezzamel and
Willmott, 2004). This is illustrated by the story when André Heiniger, chairman
of Rolex, was having lunch with McCormack(1984), the late sports agent. An
acquaintance greeted Heiniger and asked, “Hello, André, how are you? How is
the watch business?" André Heiniger smiled and quietly replied, “I haven’t the
slightest idea.” His acquaintance laughed, thinking that it was a joke. But
André Heiniger retorted, “No, Rolex is not in the watch business. Rolex is in
the luxury, in the status business.” What is totally different, in terms of
competitors: not other watch manufacturers but other status symbols providers,
such as gold pens, rings, jewels, mink coats (in the case of ladies’ Rolex), being
a member of prestigious social clubs, the acquisition of a higher priced car, and
so on.

Finally the definition of mission contributes towards synthesis (Volberda, 2004),

concentration of efforts, as everyone, from the head of the company down
through its bottom, now has a common understanding of what one is trying to
achieve. Since performance depends on focus and a mission statement
contributes to focus, it will also facilitate performance1 through developing
entrepreneurial capabilities within the organizations (Karra, Phillips and Tracey,
2008).

4
 Having established the need to define an organisation mission well, the question
is: how to do it.

Literature has recommended that one uses three main elements. And
globalisation that one adds a fourth. The three elements suggested by literature
are:

1. the product/technology on offer; (Burgers, Bosch and Volberda, 2008)

2. the need served; (Burgers, Bosch and Volberda, 2008)
3. the type of clients served (Hanan, 1974);
4. and the fourth element that globalisation now requires is the location
(geographical area, distributions channels and time dimension) in which
the company operates.

These four elements of the mission are the four sides of the strategic square
which defines the context of the company, i.e. its business, its activity, what it
does for a living (see Figure 1).

We shall next present the rationale for this first three elements (product, need
and client) in section II; and then make the case for the importance of the fourth
element: location in section III. Thus showing what happens if location is not
included in the business definition.

Take in Figure (No.1)

II. The first three steps

The idea that the mission of an institution must be seen as a square, defining the
context of its market, is the result of a process of evolution. First Levitt, 1960,
called attention to the fact that any definition of mission must include the need
to be satisfied. This is illustrated by the story (Vasconcellos e Sá, 1999) when
Peter F. Drucker visited a company manufacturing glass bottles. As the
complete board of directors awaited him, Drucker went in, sat down and calmly

5
asked, “Well, sirs, what is your business?” A heavy silence filled the room. The
directors looked at one another, thinking had he not done his homework, to the
point that he did not even know what was the company’s business.

Finally, the chairman of the board cut the uncomfortable silence and spoke up:
“Mr Drucker, our business is to make glass bottles.”

Drucker calmly replied, “I don’t agree. Your business is to make containers.

This need can be satisfied by making glass or plastic bottles, cardboard or
aluminium cartons or cartons in any other metals. For the time being you have
opted to satisfy the need for containers exclusively in the form of glass bottles.
Fine. But you must define your business by the need and not the product, in
order to keep potential opportunities in your mind (the eventual manufacture of
other types of containers), as well as who both your direct and indirect
competition is.

In other words, a company’s business concerns the need it sets out to satisfy and
not the product it uses to satisfy this need. And from the need satisfied by the
company both the opportunities and the competitors are identified (Drucker,
1964).

The next step in the evolutionary process of defining mission as a square came
when Ansoff, 1967 observed that defining the mission of a company in terms of
need is not enough to provide a useful guide about the company’s business.

Take the transportation business. It can include taxis, rental cars, all types of
flights, including chartered, railway, the construction of boats and ships of
various sorts and all types of road vehicles: from subcompacts to luxury,
including vans, buses, armoured and station wagons. These are completely
different businesses, thus showing that the simple mention of the need does not
supply the necessary common thread. Something else is needed.

The same applies when considering Scholl, a manufacturer of products for feet
focusing on the need for comfort. First of all, foot comfort can be satisfied by

6
shoes, sandals, powders, lotions or cushioned plasters. In fact, Scholl makes
these five kinds of products. And then the marketing – including the distribution
channels – differs in accordance with the products manufactured. Some
products are distributed through shoe shops (shoes and sandals), other by
supermarkets (cushioned plasters) and others still in pharmacies (powders and
lotions). Still, in a more general sense, comfort can be satisfied by cars,
furniture, interior design, ergonomic chairs, clothes, etc. So, again, all these
products satisfy the need for comfort. But businesses manufacturing these
various products have absolutely nothing in common with the others.

As a result, Ansoff suggested that an organisation mission should indicate the

product to be offered as well as the need. It is also frequently useful to add
some information about the technology to be used, as the same product can be
based on several alternative technologies. For instance, laboratory diagnostic
equipment can use: apparatus sensitive to colour, dyes, lasers, pressure,
computerised tomography, X-rays or ultrasound. The choice of the technology
to be used is critical in terms of its implications.

The third step towards how to define one’s business came in a remarkable article
Hanan, 1974 who introduced a third dimension to the definition of the mission:
the definition of the client. Hanan argued that including the client dimension in
the definition of the business would not just make it more specific, precise, but
would also create a company which was more responsive to the client’s needs.
In fact, as the needs in terms of hardware and software vary according to the
client, large computer companies have frequently opted to have a structure with
divisions specialised on various types of clients, distinguishing among
households, professionals, small companies, services such as finance,
distribution and hotels, and research centres.

There is no doubt that two companies - if their clients differ - can offer the same
product (computer hardware and software) and serve the same need (information
processing) but be in very different businesses (in terms of marketing,
competitors and objectives to be pursued). Tandy, which focuses on the self-
employed profession and small firms, and Cray Computers which specialise in

7
research centres are extreme instances. But other examples can be found among
Compaq, Packard, Bell, Oracle, Lotus, Gateway, and so on.

Another example illustrates the importance of the client dimension when

defining one’s business.

The United States carpet industry is such an example. In the 50’s the industry
was mature and apparently it would go into irreversible decline.

Then the industry carefully analysed who were the main clients at that time. The
traditional client of the industry was the housewife well into her 30s and 40s.
Not young couples buying their first house. At that phase they do not have
much money, concentrate on buying the essential and therefore put off the
acquisition of carpets. The industry recognised the opportunity to make the real
estate builder its client, as covering the floor is one of the few ways of altering
the comfort of a house. Thus, the industry started highlighting wall-to-wall
carpeting, by means of which a cheaply finished floor could be covered,
providing a better house at a lower cost for the builder.

So, in the past, Levitt, Ansoff and Hanan have stressed three of the four
elements in figure 1: 1) need; 2) product/technology; and 3) client.

The age of globalisation requires now a fourth dimension: location. As we will

see next.

8
III. The location dimension on a global age

When markets were relatively closed, location played a secondary role. But as
they became more and more open and deregulated, location, in terms of 1)
geographical area, 2) distribution channels, and 3) time dimension, becomes more
important (Wu and Pangarkar, 2006), (Meyer and Tran, 2006) and (Yip, Rugman,
and Kudina, 2006).

By managing any of these three location dimensions (geography, distribution and

time), when defining its business, companies achieve four very important things:

A. - They select their competition;

B. - They know how to adapt their products;
C. - They are directed towards the proper marketing efforts; and
D. - They face distinct opportunities. – (Morris, 2005) as value innovation is
implemented (Kim and Mauborgne, 2005)

Let us see how by managing any of the three locations (geography, distribution
channels and time), organisations achieve A, B, C and D. And let us start with
geographical location.

3.1 Geographical location

Freedom from technical and economic barriers offer companies more flexibility
regarding how to geographically position their products. Flexibility means greater
freedom of choice and thus increased management responsibility in choosing
location. Since location is no longer predetermined, or even strongly restricted, but
a wide open choice, the importance of the location decision increases. Just as has
been pointed out (Collis and Rukstad, 2008).

And so, by using the geographical dimension, companies are able to “select” their
competitors (Muller, 2006).

9
For example, when, in the sixties, Japanese car manufacturers decided to venture
into Europe they started by focusing on Finland, Norway and Switzerland at the
beginning of the 1960s, then at the mid of that decade on the Benelux (Belgium,
The Netherlands and Luxembourg). At the end of the sixties, they started
focusing on Great Britain and only at the end of that decade did they venture
strongly into France and Germany. Italy was left for the early eighties, only. In
other words, Japanese companies started their activity and little by little entered
into Europe through the countries where the national car industry was nonexistent
or weak.

Geographic management enabled the Japanese to “select” their competition. And

globalisation, with its freedom from technical and legal barriers, provided for
greater geographic flexibility.

Delta Airlines provides another example of how the geographic location can be a
powerful tool to outmanoeuvre competition. In order to avoid direct competition
from Eastern, Delta decided to focus on the southeast of the United States. For
such a purpose it used Atlanta as the centre of its transfer system, having 40 to 50
planes on the ground 10 times a day. But there, of course, in the southeast, Delta
had to meet new direct competitors: those companies specializing in that area,
such as Dzark, Piedmont and Southern.

Thus, geographic location is a powerful tool to manage the type of competition a

company will face. But then it also plays another major role, by stressing the
characteristics that the product or need must have in order to succeed. BMW,
Boeing, Toyota and Knorr provide four such examples.

In order to enter the Japanese market, BMW had to change the steering wheel
from the left to the right. The USA market, however, required a different
adaptation: automatic transmission, a car characteristic that many American
consumers refused to abdicate from.

10
Similarly when Boeing decided to enter into the Japanese market is had to alter its
planes to increase the space for seats and reduce the space for fuel and luggage, as
most internal journeys in Japan are short.

When Toyota decided to enter the American market at the beginning of the 1960s,
it studied this market carefully and opted to launch a subcompact (the Toyota
Corona) and no other type of car. And adapted the Corona to what the American
consumer demanded: softer driving (the Toyota Corona was the first imported car
with automatic transmission); low consumption (it went to decrease 30% in ten
years); legroom; and place to uphold the arms. All four characteristics which
Americans complained regarding the segment leader VW Beetle.

Knorr (the manufacturer of instant soup) provides a final example. It achieved

market share dominance in the southern European markets over Maggi, the brand
from the Nestlé giant. That happened, although in blind tests of taste, consumers
do not have any declared preference between the brands. Why? Because when
Knorr entered the southern European markets of Portugal, Spain and Greece, it
immediately introduced types of soup adapted to the local customs and
preferences. On the contrary, Maggi of Nestlé, tried first to push for the soups it
sold in Switzerland. Faced with rejection it tried to adapt later on, but since then
has never managed totally to recover the lost ground.

The changes in the geographical area also require alterations in marketing, both in
terms of product characteristics as well as of distribution channels. Contrary to
what happens on the North American market, where one of the critical factors of
success for cigarettes is the low level of tar and nicotine, in Latin America the
success factors are price and an image associated with more economically
developed countries, such as the United States. Hollywood and Manhattan are
examples of tobacco brands, which try to transmit this type of message and image.

Another example is provided by the Belgian editor Hergé (editor of Tintin and
Lucky Luke), when it entered the USA. One of the main problems it encountered
was access to the distribution channels. In Europe, cartoons are usually sold in
book shops which often have a specialized section. That does not happen so often

11
in America where the cartoon is usually acquired by newspapers and magazines
which publish them in very small excerpts. For this a different style of cartoon is
required, where at the end of each small excerpt (usually three or four frames)
there is a joke causing the reader to laugh or smile. That is not the case with
Tintin or Lucky Luke as they are different types of cartoons.

The examples above illustrate the impact of location, when included in a business
definition, in terms of selecting competition, adapting the products and directing
the marketing efforts.

However the use of the geographical area to define the business also brings a
fourth advantage: it draws attention to the opportunities the company encounters:
everything which occurs outside the geographical area defined as the centre of
operations. If they are opportunities which should be grasped (by firm X at the
moment Y), or not, is another question, but these opportunities should always be
borne in mind. For that to happen, the present geographical area of operations
should always be indicated. Thus the Asian market is an opportunity for the
Financial Times (which focuses on Europe and USA at the moment); geographical
expansion within the USA is an opportunity for Lone Star beer (which currently
focuses on Texas), and geographical concentration is a possibility for Schlitz
which covers all the United States.

And of course, the whole concept of what a business is for, also changes with
location.

Some countries (USA and UK) require a monistic outlook, that is, a shareholder
oriented company.

In other countries (Germany, France), the socially accepted organization is

dualistic, putting a premium on the shareholder interest, but the interests of
employees are also accounted for.

12
Finally in Japan (e.g.) prevails the pluralistic approach which assumes that the
firm belongs to all the stakeholders, with the employees interests taking
precedence.

As a corporation tries to adapt its legal subsidiaries to the social norms of each
location, its internal and external proceedings come different (Yoshimori, 1995;
Handy, 2002 and Wit and Meyer, 2004): the role of the CEO; the type of
shareholders meetings; the power of the chairman of the board; the board
members selection; the size of the boards; the effectiveness of the auditors; the
relations with the banks; and so on.

Finally, even the time element in business comes different. Enraptured in the
culture of Japanese firms is a long term view where longevity and seniority are
important. The USA is found at the opposite point. European countries are
frequently pointed out as middle examples.

3.2 Location through distribution channels

Within each geographical area, distribution channels help also define an

organisation's location. Location is where. So the distribution channels used by an
organization, is an integrant part of its location, of where the competitor offers its
products.

And deregulation and technology is a key factor here, opening up channels which
were previously closed.

Examples abound. In the financial sector, ATMs can now be found in multiple
locations previously inaccessible, including airports, railway stations,
convenience shops, and bank agencies performing multiple services at major
retailers (Sears, J. Martins, etc.) and gas stations (Texaco, Repsol, etc.).

Location in distribution channels can be of extreme importance in avoiding

competition. When Pepsi Cola focused on kids, it put vending machines in small
beverage and food neighbourhood stores, not in supermarkets or hypermarkets.
Sara Lee brand L'eggs of hosiery is distributed through supermarkets, not

13
department stores. When American Greeting decided to enter the business of
cards, it opted to distribute its products through supermarkets, pharmacies, grocery
and discount stores, to avoid head on competition with the leader, Hallmark,
whose products could be found in department stores, bookstores, stationeries and
gift shops.

3.3 Time location

The third and final aspect of location is the time dimension. Deregulation now
allows banks to be open after-hours and several have opted to.
Convenience stores such as 7-11 and Select base their competitiveness in the
overnight schedule. So do Shell Shops, which launched its global advertising
campaign under the motto "where do you find everything at 3am?"

Companies which use time to differentiate their business, have distinct types of
competitors, objectives to follow (for instance in convenience stores, access and a
few models of each product is critical while price, variety and quality become
secondary) and, of course, the focus of marketing and the type of opportunities
(product line extensions) become also different.

In short, deregulation is one of the causes of globalization, as it makes entry into

new markets easier.

That, increases the importance of location as a source of opportunities. But

deregulation also means increased competition, forcing companies in order to
differentiate themselves to use the time dimension.

So, time location becomes both, a more viable option and a necessity. Due to
regulation and (its impact on) globalization.

Just as has been argued by Mintzberg, 2001 when he discussed the strategic
change of bringing McDonalds into a new market, the breakfast one and extending
the use of existing facilities. Or in alternative introducing candlelight dining with
personal service to capture the late evening market.

14
3.4 The causes and consequences of the importance of location

Free trade, improved communications and transportation and common global

media, increased the importance of geographic location. Then, both deregulation
and technology had an impact on distribution channels and of using time as a new
source of location.

All these factors make the world both smaller (global village) and similar
(common markets across geographical areas).

And as the above examples illustrate, when the location in a business definition
changes, location changes, so do (one or more of) four other things: the objectives
a firm should pursue; its marketing; its competition; and the opportunities it faces
(see Figure 2).

In short, in a global age, location (geography, channels and time) must be added to
the former three mission elements when defining a mission, business: need,
product/technology and client suggested by Levitt, Ansoff and Hanan (see Figure
1).

Take in Figure (No.2)

15
 3.5 The mission statement as a synthesis of the organisation's market
standing

A mission/business must thus be defined indicating the four sides of the strategic
square: 1) product/technology; 2) client; 3) need; and 4) geographical area. Thus,
for example (Vasconcellos e Sá, 1999), the mission of the shoe division of Scholl
corporation2 is the manufacturer of shoes with emphasis on comfort for all social
classes in the United States. Lone Star business definition is a beer with a taste
and image adapted to and distributed in Texas, mostly for males between 25 and
35 years old. But, Zima's mission is a beer for women to be used in cocktails with
soda and gin throughout the USA (Vasconcellos e Sá, 1999). Note that in all
cases, the four elements of product, need, client and location are present. Figure 3
presents other examples.

Take in Figure (No.3)

And of course that, since nothing is permanent except change, with time, needs,
technology, competition, etc. change, forcing companies to adapt and redefine their
mission.

Technology development led Casio to change the need it served from time information
to wrist technology with watches also performing other functions such as radio, TV,
photography, mobile phones, calculators, measuring temperature, humidity, and so on.

Then, increased competition led Holiday Inn to redefine its business around the
hospitality concept (motels, hotels and time sharing) and to phase out all other activities
including airlines, railways, buses services in between cities and chartering buses for
tourism.

And the search for scale economies was the reason that led Rockwell International, a
major manufacturer of axles and brakes for lorries and cars, to expand its geographical

16
location into Germany and Italy, while keeping constant the product, type of client and
the need served.

It should be noted that, a company has an option of expanding any, (or more than one),
of the sides (product, client, need and location) of its strategic square, as shown in
figure one.

Marshall Field, a food retailer, opted for enlarging its location to Oregon, Washington,
both Carolinas, Ohio and Texas.

Other competitors, however, opted for changing other sides of the strategic square: the
need, e.g., as Dayton Hudson became a discounter; or the client, as Carlson Pirie Scott
transformed itself to become a caterer to airlines; or the product, as Albertsons did by
focusing on ethnic (mexican, new east, german, northern european, chinese) dietetic
food.

Kroger also redefined its product, but with different elements: decoration (creating a
very pleasant shopping experience); service (personalized delivery to the cars and
homes); and a special emphasis on four sections: wines; delicatessen; fruits; and flowers
(several hundred types).

It is also a well established fact that during this redefinition of business, to adapt to
market changes, companies are at least in part guided by its core ideology: in the words
of Collins and Porras, 1996, the core values that constitute a company’s essential
tenants. They may include one or more of the following: science-based innovation,
integrity, reputation as being special, encouraging individual initiative, creativity, being
a pioneer, attention to detail, meritocracy, etc.

And it goes without saying that, since structure follows strategy, the internal
organization modes must adapt to the new business definition.

Chandler’s path-breaking book The Visible Hand(1977) and a later series of papers
reinterpreting his work (Langlois, 2004; Lamoreaux, Raff and Temin, 2002; Sabel and
Zeitlin,2004), all stress how the modularity and standards that organizations work

17
under, must adapt to the environmental conditions that their business definition led them
to face.

Here, we move beyond the simple markets versus hierarchies dichotomy, to focus
attention on the broad range of techniques that managers have developed over time to
coordinate their activities.
These coordination mechanisms can be seen along one-dimensional scale, where at the
left-hand extreme is pure market exchange and at the right-hand extreme is pure
hierarchy. In the middle of these extremes are long term relationships, that is repeated
transactions among independent players which opt to keep on dealing with each other.

In short, with time all changes. First the way a company defines its business. And then
the coordination mechanisms it uses to implement that business definition.

18
IV. Precision as a vital condition for defining the mission.

By using the four elements of need, product/technology, client and geographical

area, both the company's position on the market and the conclusions obtained are
exact. Precise. Narrowly defined.

Indeed, conclusions can now be obtained regarding four aspects: the competitors
faced; the marketing to be developed; the characteristics of the product; the
objectives (critical factors of success) to be implemented; and the opportunities
available (see Figure 4). The proof that a mission where one of these four
elements is missing is not accurate, and therefore inadequate to be carried out, is
given by the fact that if one of the four elements is changed (one of the sides of the
strategic square), and even if the others remain constant, the conclusions regarding
objectives, marketing, competition and opportunities the company has, can be
different.

Let us provide a few examples that it is indeed so.

Take in Figure (No.4)

19
4.1 Objectives

Success factors are areas where excellence is required (contrary to satisfactory

performance needed in all other areas). Thus, to achieve excellence in success
factors must be a company’s objective. But the areas where special focus and
competence are necessary change with the definition of the mission. Sometimes it
is even enough to change one of the four sides of the strategic square of the
mission, for the critical factors of success to change (and therefore the objectives
of the company, too).

Scandinavian Airline Systems (SAS) is a good example of this. When Jan

Carlzon became CEO of SAS, he redefined its mission and decided to concentrate
on the executive segments of the air transport industry in the whole of Europe.
Thus: aeroplanes-product; air travel-need; executives-clients; Europe-geographical
area. The result was that SAS paid less attention to the other areas of the market,
such as charters, economy class, cargoes, tourism and the low-tariff segment.

By defining its business in this way, SAS acquired its particular success factors.
They are: 1) punctuality, 2) safety, 3) individuality; and 4) comfort, both on land
and in the air. Then, after establishing these objectives (success factors), SAS
developed programmes to implement them, which was the same as deciding where
the larger part of the company's budget, personnel and management time should
go. For example, in order to carry out the objective of providing comfort on land,
SAS developed various programmes in which reservations could be made in SAS
hotels in European and American cities. In addition, SAS manages a fleet of
limousines, helicopters, cars for hire, to transport its passengers from the centre of
the city to the airport. And so on.

4.2 Marketing

Then a change in one of the four elements of the mission can also have
implications in terms of marketing tactics to be followed (publicity, message,
distribution channels, price, etc.). All these marketing variables are very different

20
from footwear to footwear company. Why? Because the need also changes:
fashion (C Jourdan); protection against the cold (Sorels); walking on the beach
(Jhol); large sizes (Eurico); in comfort (Scholl); home (Rilago); inpermeability
(Edmar); dancing (Interluva); easygoing image of youth (Commander) and so on..

4.3 Competition

With the mission defined by the four elements of the strategic square, straight
conclusions can also be taken regarding who is and is not our direct competition.
An example is provided by New York Air which, in order to avoid competing
directly with United Airlines, changed the client dimension of its mission, from
executives to low-price passengers. This meant having recourse to non-union
employees, stopping giving meals on board, using low-cost aeroplanes and having
very simple and spartan booking offices and rooms in the airports.

4.4 Opportunities

Finally, by defining its mission with the strategic square, a company can expand
its operations in four ways: expansion of products (new products for its
operations, keeping all or some of the others sides of the square constant);
expansion of clients (acquire new clients); expansion of needs; and geographical
expansion (see Figure 5).

Take in Figure (No.5)

21
Yamaha is a good example of expansion of a product, and maintaining constant
the need (leisure), the geographical area (Japan, Europe and the United States) and
the type of client (medium/upper class between 20 and 40 years old). By defining
its need as leisure, not transport, Yamaha capitalised on its image, knowledge of
the psychology of clients, distribution channels and sales force (this to a lesser
degree) to commercialise a wide range of products such as motorcycles, ski
equipment, pianos, off board engines, tennis racquets, and soon. (See Figure 6)3.

Take in Figure (No.6)

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V. Conclusion

Figures 1, 2 and 4 are central to summarise this article.

Figure 1 illustrates that due to various aspects of globalisation, location

(geography; plus distribution channels; plus time location) must be added as a new
element (Filippaios and Rama, 2008) to define an organisation's business or
mission. As the fourth side of the strategic square.

The globalisation elements which enhance the importance of location are: (1) free
trade; (2) improved communications; (3) faster transport; (4) shared mass media;
(5) deregulation; and (6) technology innovation (see Figure 2).

So an organisation’s mission or business must now be defined by a strategic

square which encompasses 1) the product/technology; 2) the need; 3) the client;
and 4) the location.

By using these four elements when defining a business, precision, a major

requirement, according to Drucker, is achieved. As well as business orientation
(Pearson, 1993). It becomes clear what the main objectives to be pursued are; what
type of marketing is required; which competitors must be faced; and where
opportunities stand. That is the message of Figure 4.

And with precision one avoids both strategic inflexibility (Combe and Greenley,
2004) and vague missions or business definitions which are 1) useless, 2) a waste
of time, and 3) ultimately portray a negative image of management.

As T. Levitt, in his Marketing Myopia article put it: "vague missions convey the
idea that any road is okay. If that is the case, the chief executive might as well
pack his attaché case and go fishing. If an organisation does not know or care
where it is going, it does not need to advertise that fact with a ceremonial
figurehead. Everybody will notice it soon enough".

23
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Notes:

1
Others achieve good standards of performance in spite of (not due to) the lack of focus and due to the
attractability of each division’s market segments and the strength of each division.
2
Scholl corporation has other divisions which manufacture cushioned plasters, lotions, powders, etc.
3
By contrast, Honda defined its need as transportation and therefore continuously upgraded its
motorcycles and cars by launching new models of greater power and price, as well as other transportation
vehicles: vans, all-terrain vehicles, buses, and so on.

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