Theme 3.1.1-3.1.4 Flashcards
Definition of a mission statement?
“Reason for existence”
Is the over-riding goal, the reason for a businesses existence and its vision for the future
Example of a mission statement
“We are on the face of the earth to make great products” - Apple
What are features of a good mission statement
- clear sense of business purpose
- excites, inspires, motivates and guides
- easy to understand and remember
- differentiates business from competitors
- for all stakeholders - not just shareholders and managers
Issues with mission statements
- not always supported by the actions of the business
- often too vague and general
- often merely statements of the obvious
- are they just PR (public relations)?
- sometimes regarded cynically by staff
- to be effective, everyone in the business has to “buy it”
- argued that corporate and functional objectives are more important as these help achieve long term goals
Mission and hierarchy objectives (triangle) and if they are long, medium or short term
- mission (long term)
- corporate objectives (medium term)
- functional objectives (short term)
- business unit/ individual targets
Features of good corporate aims/ objectives
They have to be SMART: Specific Measurable Achievable Realistic Time stamped (e.g. in the next five years)
Benefits of a mission statement
- can help guide decision-making
- can help guide corporate objectives and strategy
Aims
These are a generalised statement of where a business is heading, from which objectives can be set.
A mission is a more fervent, passionate way of expressing an aim.
Corporate objectives turn the aims into SMART targets, I.e. specific, measurable, ambitious, realistic and time stamped/ time bound
Strategies
What actions you will take to achieve the objectives
Business objective
A result that a company aims to achieve
Usually includes a time frame and lists the resources available
Examples of business objectives
- increase profit
- increase market share
- survival
Examples of business strategies (how you will achieve business objectives) if the objective is:
To increase profit
Reduce costs and prices
What is a distinctive capability?
It is a form of competitive advantage that is sustainable as it is difficult to for other firms to replicate this
What are three types of distinctive capability?
Architecture - strength of relationships within an organisation between employees, but also with suppliers
Reputation - building strong brand image
Innovation - developing new products or processes
Strategy definition
Is more long term and refers to achieving an overall goal or target of business e.g. market penetration
Tactics definition
Shorter-term actions that help to achieve the strategy e.g. promotion (to achieve market penetration)
Example of a tactic
Promotion (to achieve market penetration)
Example of a strategy
Market penetration
Corporate strategy definition (same as aim and objective)?
Provides and medium-to-long-term plan for meeting company-wide objectives
What is SWOT analysis?
SWOT is an analysis of the internal strengths and weaknesses of the business and opportunities and threats presented by its external environment
Why is it important to know your businesses Strengths and Weaknesses (the SW of SWOT)?
It’s important so you can play to your strengths, work on your weaknesses and recruit people that have strengths that you lack
SWOT - the external environment definition
Factors outside the businesses control provide opportunities and threats to a business
Examples of opportunities and threats to a business (external environment therefore out of businesses control)
- demography
- economic factors
- news laws?/ regulations
- technology
What does PESTLE stand for?
Political Economic Social Technological Legal Ethical/ environmental
What is PESTLE analysis?
PESTLE analysis is a framework for assessing the key features of the external, environment facing a business
It provides a useful way to analyse the overall external environment
Examples of PESTLE factors (Political)
- competition policy
- industry regulation
- government spending and tax policies
- business policy and incentives
