KW

Business Objectives and Strategy Flashcards

Business Objectives and Strategy

Core Concepts

  • Business Objectives: What a business hopes to achieve.

  • Business Strategy: What a business does to achieve its objectives.

Mission Statements & Objectives

  • General Aims & Missions: Broad, overarching goals.

  • SMART Objectives: Specific, Measurable, Achievable, Relevant, Time-bound objectives.

  • Analyzing company documents (e.g., accounts) helps clarify the relationship between aims, missions, and objectives.

  • Critical assessment of mission statements involves considering different stakeholder views.

Analytical Tools & Theories

  • Businesses should explore various analytical tools and theories to develop a corporate strategy.

  • It's important to understand both the uses and limitations of these tools.

Hierarchy of Business Objectives

  • Objectives progress from:

    • Mission statements and general aims

    • Corporate objectives

    • Departmental/functional objectives

  • SMART objectives are crucial at each level.

Mission Statement Analysis

  • Purpose: Why does the mission statement exist?

  • Audience: Who is the mission statement intended for?

  • Reality Check: How does the business's corporate strategy align with its mission statement?

  • Consider the uses and limitations of mission statements.

  • Analyze different stakeholder perspectives; who is the mission statement aimed at, and how does the strategy impact them?

Definitions

  • Business Aim: The overall target or goal of the business.

  • Business Objectives: The specific steps to meet the overall aims. A business usually has multiple objectives to meet its aims.

  • Mission Statement: A short statement of the company's vision and values, setting aims and objectives, and detailing the overall reason for its existence. It should be short term statement.

Mission Statement Details

  • States the business's main purpose, reflecting its goals and values.

  • Outlines core activities.

  • May reference:

    • Operating markets

    • Key commercial objectives

    • Stakeholder values

    • Ethical stance

  • Example: "…to be our customers' favourite place and way to eat – with inspired people who delight each customer with unmatched quality, service, cleanliness and value every time."

Examples

  • Nike's mission statement: "To bring inspiration and innovation to every athlete* in the world." Bill Bowerman's definition of an athlete: "If you have a body, you are an athlete."

Criticism of Mission Statements

  • Critics argue they are merely a public relations tool.

  • Example: Amazon's vision: "Our vision is to be earth's most customer-centric company; to build a place where people can come to find and discover anything they might want to buy online."

Additional Mission Statement Examples

  • Coca-Cola: "To refresh the world in mind, body and spirit. To inspire moments of optimism and happiness through our brands and actions. To create value and make a difference."

  • Walt Disney: "The mission of The Walt Disney Company is to be one of the world's leading producers and providers of entertainment and information. Using our portfolio of brands to differentiate our content, services and consumer products, we seek to develop the most creative, innovative and profitable entertainment experiences and related products in the world."

Main Elements of a Mission Statement

  1. Purpose

    • Outlines why the business exists.

    • Communicates what the business does, for whom, and why.

  2. Values

    • States corporate values they emotionally invest in, such as integrity, sustainability, innovation, and quality.

  3. Standards & Behavior

    • Outlines the business’s practices, ethical behavior, and commitment to high standards.

  4. Strategy

    • Outline of how the business will achieve its main objectives.

Corporate Objectives - Details

  • Provide direction and purpose.

  • A business aim is the overall target, while business objectives are the steps to achieve that aim.

  • Example:

    • Aim: To make £120,000 profit.

    • Objective: To make £10,000 profit each month for the next year.

Corporate Objectives Characteristics

  • Should flow from the mission statement and corporate vision.

  • Set by senior management.

  • Aimed at satisfying shareholders, often related to profit or dividends.

  • Examples:

    • Increase operating profit 4% over the next 24 months.

    • Increase dividends by 2% over the next three years.

  • Objectives need to be SMART.

Development Guidelines

  • Should be specific to the company's history, vision, and mission statement.

  • Example: To achieve a 30% share of the total sales in the children’s clothing market within five years.

Department Objectives

  • Work is divided into departments (sales, marketing, HR, operations, finance).

  • Each department sets its own objectives, flowing from corporate objectives.

  • Example: Marketing department aims to increase sales 3% each quarter or increase sales revenue 2% each year.

  • This helps the business achieve its corporate objectives and provide more dividends for shareholders.

Objectives Hierarchy

  • Aims → Mission statement → Corporate objectives → Functional objectives (Finance, Marketing, Operations, People)

  • Objectives should contribute to achieving the level above.

Purpose of Mission Statements

  • Defines the essence or purpose of the business in a few sentences.

Corporate Strategy vs. Mission

  • Example: Facebook's old mission statement: “To give people the power to build community and bring the world closer together.”

Uses of Mission Statements

  1. Focus:

    • Involves all employees in the business.

    • A clear mission statement gives employees a shared understanding.

    • This aligns actions and efforts with overall goals, resulting in teamwork and consistency.

  2. Profitability:

    • Motivates employees to become more efficient.

    • The mission statement inspires a sense of purpose and belonging.

    • This increases motivation and encourages more efficient work practices, potentially increasing profits.

  3. Identity:

    • Creates an identity in a competitive marketplace.

    • A strong mission statement differentiates the business from competitors.

    • Results in stronger brand recognition and customer loyalty.

Limitations of Mission Statements

  1. Unrealistic & Over-Optimistic:

    • Unachievable goals create false expectations.

    • This makes goals difficult to take seriously, resulting in loss of trust and reduced motivation.

  2. Waste of Time & Resources:

    • If the mission statement has little impact on daily operations, management may waste time and money.

    • This results in inefficiency and missed opportunities to focus on more productive strategies.

  3. Conflicts & Inconsistencies:

    • A vague or poorly structured mission statement leads to conflicting goals.

    • This causes confusion and a lack of cohesion within the business.

  4. Ambiguous:

    • If a mission statement lacks clarity, it may fail to provide meaningful guidance to employees.

    • Results in uncertainty about the business's direction and priorities.

  5. Obsolete:

    • If the business changes significantly (merger, product shift), the mission statement may no longer reflect aims or values.

    • Results in misalignment between strategy and mission and a disconnect with stakeholders.

General Aim vs. SMART Objective

  • Difference between a general aim/mission and a specific SMART objective is in the application.