3.7.1 Mission and corporate objectives Flashcards
What does a mission statement set out and who do they relate to
Mission statements sets out the purpose for a business existing. The mission relates to all stakeholders.
What do mission statements typically focus on
Values of the business
Long term aim of the business
Impact the business intends to have on society
Importance of different stakeholders
What may influence the missions of a business
Values of founders The industry the business is in The views of society The size of the business and types of ownership The culture of the business
What is the relationship between mission and corporate objectives
Whereas a mission statement will lay down the broad purpose of a business, corporate objectives will set clear targets that are specific and measurable
What are some typical areas that corporate objectives tend to focus on
Profitability Social responsibility Growth Shareholders value Market standing Innovation Sustainability
Internal Factors affecting corporate objectives
Poor performance New leadership Business ownership Business culture Business growth
External factors affecting corporate objectives
Economic conditions Actions of competitors Global prices Technological change Social change
What is short-termism
The pressure of achieving short term gains over long term success
What is strategy
A long term plan/approach that a business will take in order to achieve its objectives
What does strategy involve
A major commitment to resources
Clear ……. guide ……. ……..
Clear strategies guide tactical decisions
Example of strategy guiding tactical decisions
A business may have a strategy to become market leader by have a wide range of innovative products in the market
What are tactics
Tactics are the day to day decisions taken by middle managers
What do tactics involve
Tactics are frequent and involve fewer resources but are taken to achieve the strategic direction of a business
What are functional objectives guiding
They guide tactical decisions made by managers on a day to day basis
What are examples of functional objectives and put them into context
Finance - to reduce labour costs to 40% of the overall expenditure budget
Marketing - launch two new products in the next year
Operations - reduce wastage by 20% within the next 6 months
People - ensure employees have a career action plan and target around areas for personal career development by Christmas
What are functional objectives
Objective that are set by functional managers/directors that support and contribute towards achieving corporate objectives
What is SWOT analysis
A tool that a business uses to analyse its current position and external factors that might affect it
What does swot stand for
Strengths
Weakness
Opportunities
Threats
Example of strength
Business may have strong brand image - business will develop strategy around this
Example of weakness
Poor cashflow - business will eliminate anything that requires cashflow
Example of opportunities
A fast growing geographical market - business will try and exploit these with its strategy
Example of threat
A new competitor entering the market - business will attempt to protect itself against them
Benefits of SWOT
Assists strategic thinking in a structural way
Low-cost simple approach
Can be combined with other thinking models e.g PEST
Drawbacks of SWOT
Subjective - depends on opinions of managers
Does not offer clear solutions
Classification may depend on perspective
