Module 1, Chapter 1 - Organisational Objectives, Vision, Mission and Values

Question 1

Give examples of factors that can influence the objectives of an organisation

Answer 1

The objectives an organisation pursues are dependent on a number of factors, including the business sector the organisation operates in, its legal structure and the goals of the stakeholders involved.

Question 2

Organisational objectives vary between business sectors. Provide examples.

Answer 2

In the private sector, for example, a new sole trader may be focused on breaking even and establishing its place in the market to survive and keep the business going. However, a larger, more established, private sector organisation may be interested in generating large profits for shareholders or pursuing growth to dominate the market. In contrast, a voluntary sector organisation such as a charity is motivated to generate revenue to fund projects that meet its charitable purposes. For example, by providing facilities for the local community to play tennis, netball and football, a local sports charity might be fulfilling its charitable purpose to advance amateur sport for the public benefit.

Question 3

The legal structure of an organisation also has an influence over the types of objectives it can pursue as some objectives may be incompatible with its legal structure. Provide an example

Answer 3

A co-operative business is set up as its members wish to create a business that embeds social goals such as job creation, co-operation and democracy into its day-to-day activities. If the organisation pursued an objective of maximising profits, this would be in direct conflict with its legal structure; to maximise profits, it needs to minimise costs and one way to cut costs is by creating job losses.

Question 4

Objectives are also influenced by the goals of different stakeholders in organisations. Explain why this could negatively affect a public limited company

Answer 4

Shareholders may have the goal of maximising profits to get the best return on their investment, whereas the directors may be pursuing their own individual goals such as increased personal rewards or enhancing their career status. This conflict between the goals of directors and shareholders could result in differences of opinion over priorities and objectives for the organisation, adversely affecting the success of the company if the conflict is poorly managed.

Question 5

How are mission and vision statements used by the insides of an organisation? Give four examples

Answer 5

1. help senior management in the development of a strategy
2. develop performance measures
3. motivate and focus employees with common goals
4. assist with the development of an ethical framework

Question 6

How are mission and vision statements used by the outsides of an organisation? Give three examples

Answer 6

1. They encourage support from third parties (e.g. generating funding and endorsements)
2. They create closer links to, and better communication with, customers, suppliers and other external stakeholders
3. They serve as an effective public relations tool

Question 7

What is the difference between a mission statement and a vision statement?

Answer 7

A mission statement communicates how an organisation plans on achieving its objectives and is very much focussed on the present (what the organisation is doing, how it’s going to do it and why it’s doing it), whereas a vision statement communicates where an organisation wants or aspires to be in the future.

Question 8

What is a core values statement?

Answer 8

A core values statement is a companion statement that accompanies the vision and mission statements.

This statement declares how the organisation will behave during the process of realising its mission and vision.

It articulates the principles and values the leaders will follow when carrying out the activities of the organisation.

Question 9

Define ‘vision statement’

Answer 9

A vision statement is designed to communicate where an organisation wants or aspires to be in the future. An effective vision statement does not focus on the current state of the organisation but articulates a realistic vision of the organisation’s mid- to long-term goals. The language used in vision statements is often inspirational in nature and may set out an organisation’s plans for the future in terms of blocks of time (e.g. where it wants to be in three, five and ten years’ time).

Question 10

Define ‘mission statement’

Answer 10

A mission statement is designed to communicate how an organisation plans on achieving its objectives. It is very much focused on the present – what the organisation is doing, how it’s going to do it and why it’s doing it.