7.1 mission, corporate objectives and strategy.

Question 1

Mission

Answer 1

Overall reason for business’ existence.
Main purpose of a business- determines business’ strategic position.

Question 2

Mission statement

Answer 2

Written statement that states the purpose of an organisation.
Provides common focus for everyone within an organisation- hence a common sense of direction.

Question 3

Vision statement

Answer 3

Looks into future, can be used as source for inspiration to achieve an idea.

Question 4

Influences on the mission of a business:

Answer 4

~ Personal beliefs, values & objectives of the leaders/ founders
~Value of business’ employees
~The industry that it is part of e.g fashion industry
~Societies views e.g ethics and the environment
~The ownership e.g sole trader, PLC

Question 5

In order:

Answer 5

1. mission statement
2. corporate aims
3. corporate objectives
4. corporate strategy

Question 6

Corporate aims

Answer 6

Long term targets & plans to fulfil the mission statement

Question 7

Corporate objectives

Answer 7

Medium to long term quantifiable targets to fulfil mission statement

Question 8

Corporate strategy

Answer 8

Actions to be taken by the business to achieve its objectives.

Question 9

Influences on corporate objectives and decisions:

Answer 9

~Short termism
~Business ownership (PLC, sole trader…)
~Business’ internal environment
~Business’ external environment

Question 10

Short termism

Answer 10

Pressure on a business to perform in the short term- e.g maximise profits & shareholder returns.
May be at cost of long term growth.
e.g if profits are used to issue dividends rather than reinvested in the business to fund growth.

Question 11

Business’ internal environment
(influences on corporate objectives & decisions)

Answer 11

~poor performance.
~a new leader, may want to change objectives.
~business culture, e.g values, ways of doing things.

Question 12

Business’ external environment
(influences on corporate objectives & decisions)

Answer 12

~state of the economy, recession? doing well?
~prices on global markets, e.g oil price fluctuations- significantly impact on a business’ costs, therefore profits.
~technological changes.
~patterns of migration.

Question 13

What are strategies?

Answer 13

~Medium to long term plans made by a business to meet its corporate objectives.
~Made by senior managers.
~Require an investment of resources such as time & money.
~Once made, hard to reverse.

Question 14

What are tactics?

Answer 14

~Short term decisions.
~Fewer resources needed.
~Easier to reverse.
~Normally taken by junior management.

Question 15

SWOT analysis: what it stands for:

Answer 15

Strengths, weaknesses, opportunities, threats.

Question 16

SWOT analysis: what it is:

Answer 16

A diagnostic tool used to identify the internal strengths and weaknesses and the external opportunities and threats to a business.

Question 17

Possible strengths:

Answer 17

~high levels of cash.
~strong brand.
~highly skilled and loyal staff.

Question 18

Possible weaknesses:

Answer 18

~high long term borrowing/ high gearing.
~low operating profit (net profit).
~lack of new or innovative products.

Question 19

Possible opportunities:

Answer 19

~growth in a major market.
~moving into a developing economy (BRICS).
~embrace changes in technology.
~Rising levels of incomes amongst target market.

Question 20

Possible threats:

Answer 20

~being taken over by a larger competitor.
~change in consumer tastes leading to a fall in demand.
~new legislation leading to increase costs.
~a downturn in the economy.

Question 21

Value of SWOT:

Answer 21

~it is a structured approach to analysing a business.
~considers both internal & external threats.
~includes both qualitative & quantitative factors.
~it can look to: -maximise strengths.
-minimise weaknesses.
-take advantage of opportunities.
-reduce impact of threats.

Question 22

Limitations of SWOT:

Answer 22

~can provide good info, but unlikely to give solutions.
~offers little assistance to managers in judging relative importance of SWOT.
~can be very subjective (open to an opinion).