Mission, Corporate objectives and Strategy.

Question 1

What is a mission statement ?

Answer 1

• Sets out the purpose of an organisation and says why the business exists.

Question 2

Mission statements commonly focus on …

Answer 2

• Values of the business
• where the business wants to be
• range of the firms activities.
• importance of different groups e.g. employees and investors.

Question 3

A couple positives of having a clear mission statement:

Answer 3

• Everyone in the business knows what they should be doing and everyone is working towards the same goal.
• Should make decision making easier, managers can compare options in relation to the businesses mission and the mission statement can act as an anchor.
• Can motivate people, they know why they are employed and what the business wants to achieve.

Question 4

What is a vision statement?

Answer 4

• Sets out what the business wants to do or be in the future.
• Vision statements are longer term than mission statements and can inspire stakeholders.
• Vision statements and corporate targets should be dovetailed meaning its corporate objectives should enable a business to fulfill its vision.

Question 5

Influences on a businesses mission …

Answer 5

• Value of the founders of the business
• Values of businesses employees
• industry
• society’s views
• ownership of the business

Question 6

Values of the founders of a business:

Answer 6

• Can instil certain values in a business which are fundamental in determining why the business exists.

Question 7

Value of the business’s employees:

Answer 7

• Values of employees begin to change that of the organisation, senior employees will have a greater influence as they will take decisions which will directly influence the business’s mission.

Question 8

Industry in which the business is a part of:

Answer 8

• Industry businesses are much more likely to be successful if they operate with certain values and this will be reflected in their mission statement.
• e.g business’s in the fashion industry are likely to operate with mission statements which emphasise creativity whereas in the pharmaceutical industry they will place value on innovation and operate with long term horizons.

Question 9

Society’s views:

Answer 9

Currently there is considerable concern with the environment at this moment in time.
Led to businesses addressing the environment within their mission and vision statements and to become more sustainable.

Question 10

Ownership of the business:

Answer 10

• May depend on whether the business is operating or part of the private or public sector

Question 11

What are corporate objectives:

Answer 11

• Turn the mission statement into something more quantifiable.
• Medium to long term goals established to coordinate the business.
• objectives that relate to the entire business
• set by senior managers

Question 12

Examples of corporate objectives :

Answer 12

HR - motivation
Profits - overall level
Social Responsibility - responding to stakeholders needs.
Innovation - development of new methods of production

Question 13

Influences on corporate objectives and decisions will include the business’s ownership:

Answer 13

External influences:
- State of the economy
- Global Prices
- Technological changes
- Migration

Internal influences:
- Business culture
- Poor performance
- New leader

Business’s ownership and pressures for short-termism

If such objectives are met then this may attract shareholders.

Question 14

Influences on corporate objectives and decisions : Pressures of short termism

Answer 14

• Refers to an excessive focus on short term results. e.g maximising profits in a financial year.
• Can prevent senior managers thinking for the long term. Encourages decisions which frequently involve cutting costs and a loss of jobs.

Prevents the UK from developing businesses that are internationally competitive and are essential to the future success of the economy.

Question 15

Influences on a business’s corporate objectives and decisions: Business’s internal environment.

Answer 15

• Poor performance indicated by a decline in sales, revenue and loss of market share may provoke a change in a business’s strategy.

Question 16

A new leader :

Answer 16

• May have a major influence on the objectives set and the strategic decisions that are taken in pursuit of those objectives.

Question 17

Business’s culture:

Answer 17

• Workforce may have a set of values, attitudes and beliefs.

e.g a business may encourage employees initiatives, so they may decentralise the organisation and delegate authority to more junior employees.

Question 18

Business’s external environment:

Answer 18

• State of the economy
• Technological changes
• Patterns of migration
• Prices on Global markets

Question 19

State of the economy:

Answer 19

Ability of consumers to spend money is curtailed and they seek value for money and competitive prices. Businesses have to adjust their corporate objectives to reflect this.

Question 20

Prices on Global markets:

Answer 20

• Impact heavily on objective setting and strategic decision making in many industries.
  e.g oil

Question 21

Changes in technology:

Answer 21

• May encourage firms to have objectives centered around being capital intensive.
• More dramatic impact on a business’s model as retail firms use the potential of the internet to reach customers and supply products 24 hours a day.

Question 22

Patterns of migration:

Answer 22

• Over last 20 years more people have entered the uk than have left.
• Immigration affects the workforce that is available, as well as providing additional demand in general. This means businesses have to change their objectives and corporate strategy accordingly

Question 23

Difference between strategy and tactics:

Answer 23

• A corporate strategy is a long-term plan to achieve the business’s vision through attaining it’s corporate objectives.
• Tactics are decisions made about how to implement a business’s strategy. Tend to be short term, to use fewer resources and have less uncertainty.

Question 24

Links between mission, corporate objectives and strategy:

Answer 24

• Vision and mission statement shape decisions made on the corporate objectives of a business.
• Tactical decisions support the achievement of the business’s strategy. And the strategy is for long-term plan to achieve the objectives.

Question 25

Strategic decision making and functional decision making:

Answer 25

• Strategic decisions are taken in the pursuit of the business’s corporate objectives.
• Functional decisions are judgements taken by managers responsible for one aspect of a business’s activities e.g. marketing or HR.

Strategic decisions are taken first with subsequent functional decisions acting to support them.

Question 26

Examples of functional decisions:

Answer 26

Marketing - may take decisions into researching about consumers needs if they are looking to launch a new product.

Finance - could relate to raising capital or managing cashflow

HR - preparing new workforce plans to meet increases in demand.

Operations - becoming more capital intensive.

Question 27

SWOT analysis what does the acronym stand for ?

Answer 27

Strengths
Weaknesses
Opportunitities
Threats

Question 28

What is SWOT analysis ?

Answer 28

• Method of strategic analysis which considers the internal and external environments of a business.
• Snapshot in time

Question 29

Strengths + Weaknesses:

Answer 29

• Look at the internal position of the business at the present time

Question 30

Examples of a business’s current strengths:

Answer 30

• Strong brand
• Highly skilled workers
• Good distribution network

Question 31

Examples of weaknesses a business may have:

Answer 31

• Low net profit margins
• large amounts of long term borrowings
• under utilised capacity

Question 32

Opportunities and threats:

Answer 32

• Looks at the external factors and looks to the future.
• Opportunities offer positive chances for the business, whilst threats are factors which might be damaging.

Question 33

Business may benefit from opportunities in the future such as:

Answer 33

• growth in a major market
• rising income levels for target market
• developing new technology

Question 34

Future threats may include:

Answer 34

• being taken over by a large competitor
• new laws
• change in consumer taste leading to a fall in demand.

Question 35

Using the information in a SWOT analysis:

Answer 35

• After conducting a swot analysis managers may develop a strategy to build on strengths and exploit opportunities, eliminate weaknesses and protect the business from threats.

Question 36

Benefits of SWOT analysis :

Answer 36

• Low cost, straightforward so almost all managers can use it.
• Assist managers to think both about the internal and external factors.
• Encourages management teams to develop plans that are in the logical context of the business, whilst actively promoting a forward looking approach.
• Can be used within a business’s functions e.g developing marketing strategies.

Question 37

Limitations of SWOT analysis:

Answer 37

• Unlikely to offer solutions to the information.
• Can be subjective depending on the opinions and positions of those collecting and analysing the data.
• No assistance to managers of the relative importance of the strength, weakness, opportunity or threat. Consequence managers may underestimate the importance of one of the elements.