Ch.3 - Purpose of business

Question 1

What is mission?

Answer 1

• most generalised type of objective – expression of its raison d’etre (reason for existence)

Question 2

What is mission statement?

Answer 2

• written communication of the mission, brief statement set out in general terms
• Purpose – Why does the organisation exist?
• Strategy – What resources, competencies or general strategy give the company a competitive advantage?
• Policies – What standard and behavioural patterns are adopted within the organisation? (e.g equal opportunities, invest in our people, …)
• Values – What beliefs do the managers and employees share?

Question 3

What are advantages and disadvantages of mission statement?

Answer 3

Advantages:
o Help resolve stakeholder conflict
o Set the direction and strategy of the organisation
o Help communicate the values and direction

Disadvantages:
o Often full of meaningless terms like ‘best’
o Often ignored by managers
o Often considered to be public relations exercise

Question 4

What are objectives meant to be? (SMART)

Answer 4

• Specific
• Measurable
• Achievable
• Relevant
• Timed

Question 5

What are objectives of NFP organisations?

Answer 5

• often have multiple objectives to consider (e.g. state primary school – educate children, improve attendance, provide challenging environment for teachers and staff, etc.)
• difficult to measure those objectives (e.g. pass rates, attendance rates, child happiness)
• stakeholder conflict may be difficult to resolve as many influential stakeholders (e.g. teachers, parents, children, government, …)
• financial constraints

Question 6

What is stakeholder mapping and what model is used?

Answer 6

• two-by-two matrix categorizing stakeholders based on their power (high, low) and interest (high, low)
• model used: Mendelow’s power interest stakeholder matrix

Low interest/Low power = minimal effort (minority shareholder)
Low interest/High power = keep satisfied (regulatory bodies, government, large customers, FSA) - can become key player if not kept satisfied
High interest/Low power = keep informed (employees, customers)
High interest/High power = key players (majority shareholder, board of directors, major donor for NFP)