What is a mission?
An organisations aims or long term intentions; its ultimate purpose a business mission is sometimes the same as its corporate aims.
What is a mission statement?
A qualitative statement of an organisation's aims. It uses language intended to motivate employees and convince customers, suppliers and those outside of the organisation of its sincerity and commitment.
Difference between vision and mission:
The vision of an organisation is what it wants to become, a mission is reflection of the present and states what the business is and what it values.
Importance of mission & vision statements:
- Communicate the purpose and values of an organisation to its stakeholders; helps to better understand the strategy.- they inform the strategy adopted by an organisation.- they enable measurable goals and objectives to be identified; helps success.
Influences on the mission of a business:
- The size of a business: A small business is personal and has less employee involvement. Large businesses reflect interest stakeholders and there is more employee involvement.- The range of activities undertaken by the business: Larger organisations = difficult to identify single sentence mission statements so instead mission lists and booklets can be an alternative, however these are less memorable.- The nature of owners and important stakeholders in a business: Must be understood and agreed upon by all stakeholders for a collective view and common purpose. Guides employee standards and behaviour and the employee involvement in decision-making leads to greater commitment.- Changes overtime: A mission needs to be continually monitored and altered.- External factors: competitors, economic conditions, government regulation etc PESTLE.- The actual performance of an organisation: Needs to match the business activity.- A businesses strengths and opportunities: Strengths include competitive advantage which is a recipe for success.- The extent to which a business demonstrates social responsibility in its actions: A reflection of the views of the nature of the founders and the leaders of business and also of its stakeholders.
What are corporate objectives?
Goals of the whole organisation rather than of different elements of an organisation. They are set to coordinate the activities of and give a sense of direction to and guide the actions of the whole organisation. They are dictated by the mission or corporate aims of an organisation.
What are the internal influences on corporate objectives and decisions?
- Business ownership: Profit making or non profit?- Relative power of stakeholders: Power of each stakeholder group and their influence. Whether the business adopted traditional perspective.- Ethics: The approach to ethics in a business.- Business culture: The type of behaviour that is considered acceptable. Major impact to how it responds to changes in the external environment.- Resource constraints: Means that every decision about how to deploy limited resources will involve a consideration of opportunity cost. Human resources: is staff sufficiently trained? can the business provide training? Financial resources: the inability to generate sufficient finance, more decisions. Physical resources: areas.
What are the external influences on corporate objectives and decisions?
- Pressure for short-termism: Does the business focus on short term profit instead of long-term performance objectives; the result of pressure from institutional investors.- The external environment: Changes in economic policy, environmental, demographic trends, actions of competitors.
Long and short-term influences:
- A financial crisis: Focus on short term survival, for example contingency plans and alternative strategies.- Long term objective of improving profitability but short-term profitability may be sacrificed for other measures.- Recession: Emphasis on survival.- Changes in government policy: May force a company to adopt a different short-term priority.- Negative publicity: Focus on improving image in the short-term.
What is a strategy?
A medium to long term plan through which an organisation aims to attain its objectives. Strategy should not be considered until corporate objectives have been agreed. Corporate strategies are for the whole business planned at board of directors' level, whereas functional are for each department. Long term and infrequent change.
What is a tactic?
This means by which a strategy is carried; out a range of different tactics may be used as part of single strategy. Carried out by functional heads of department. Short term and frequent change.
What is the distinction between strategy and tactics?
A strategy is "what" an organisation is going to do and tactics is "how" it's going to do something.
The links between mission, corporate objectives and strategy:
An organisations mission will influence its corporate objectives. Aims and objectives start off at broad corporate level and become more detailed at the level of each functional area thus encouraging a coordinated approach (the same for strategies). A corporate plan is a strategy detailing how firms aims and objectives will be achieved comprising both medium to long term actions.
What is the corporate/strategic planning process stages:
- Mission statement- Objectives- Internal environment: Reviews organisations functional areas.- External environment: Assesses key changes in external environment and makes use of a PESTLE analysis.- SWOT analysis: Key internal strengths and weaknesses and external opportunities and threats.- Strategic choice: Opportunities available for competitive advantage. Approaches and strategies.- Strategic implementation: Put strategy into effect; policies, rules, procedures, and targets in functional areas.- Control and evaluation: Monitors and reviews success, modifications.
What is strategic decision making?
Concerns the general direction overall policy of an organisation. Strategic decisions have significant long-term effects on an organisation and therefore required detailed consideration and approval at senior management level. They can be high risk because the outcomes are unknown and will remain so for some time.
What is functional decision making?
Tends to be short to medium term and is concerned with the specific functional area rather than overall policy. Functional decisions are usually taken to support the implementation of strategic decisions and are usually made at middle management level. They can usually be calculated and their outcomes are more predictable.
What is SWOT analysis?
A technique that allows an organisation to assess its overall position or the position of one of its divisions, products, or activities. It uses an internal audit to assess its strengths and weaknesses and an external audit to assess opportunities and threats. It forms part of an organisation's strategic planning process.
What is internal audit?
Involves looking at current resources, how well they are managed and how well they match up to the demand of the market and to competition. Assesses strengths and weaknesses in relation to its competitors, direct control of the business.
What is external audit?
Involves looking at the possibilities for development in different directions in the future. PESTLE analysis. An assessment of the opportunities and threats facing a business in general business environment. Factors that benefit or have the potential to cause problems; outside the direct control of the business.
Value of SWOT:
- Provides a structured approach to assessing influences on performance- Excellent basis of decision-making- Leaders can analyse what needs to be done- Can develop competitive advantage- Encourages an outward looking approach
Disadvantages of SWOT:
- Time consuming- Unexpected rapid changes; use with caution