1. Provide Direction and Focus: Vision and mission statements provide long and short-term direction for the company. Vision describes an idealized picture of the future to be achieved, while mission sets specific goals to be achieved in the near future. This helps direct the efforts of the organization as a whole.

2. Inspire and Encourage Employees: Vision and mission statements inspire employees by providing clear and ambitious goals. They provide motivation to work hard and innovate, as employees can see how their contributions contribute towards achieving those goals.

3. Guides Decision Making: Vision and mission help in strategic decision-making. They provide a frame of reference for evaluating whether decisions and actions taken are consistent with the company’s long- and short-term goals.

4. Builds Corporate Identity and Culture: Vision and mission help establish the company’s unique identity and set the desired work culture. They help differentiate the company from competitors and define the core values held by the organization.

5. Communicating Purpose to Stakeholders: Vision and mission statements also serve as important external communication tools to customers, investors, and other parties. They help clarify the company’s purpose and values to stakeholders.

As such, vision and mission statements are not just formal statements, but strategic instruments that can help companies achieve competitive advantage and sustainable growth.