A mission statement is a formal statement of the core reason why an organization exists. A mission statement is intended to provide a focus for employees, so that they have a core principle upon which to make decisions. All other planning concepts flow from the mission statement, including strategies and tactics. When confronted with a key decision, an employee should be able to use the mission statement as a reference for how to proceed. Thus, a mission statement that mandates a focus on serving customers in the San Francisco area would prevent a business from expanding outside of that area. Or, a mission statement that mandates a focus on lawn service would prevent a business from expanding into house painting.
A mission statement can also be used in public relations and investor relations, where it is communicated to outsiders to enhance their understanding of the business. Thus, an investor who only wants to invest in domestic businesses might be more willing to invest in a company that has this restriction in its mission statement.
A well-crafted mission statement should last for an extended period of time, requiring little change. If the statement is changed regularly, it either means that the original statement was not created with a sufficient amount of thought, or that the management team is ignoring the mission statement in its derivation of strategy.