This revision presentation provides an overview of the core strategic topic of business mission, aims and objectives. The main focus of the presentation is to outline the theory of the use of mission, aims and objectives rather than provide examples of these in context.

1. Understanding
Mission, Aims &
Objectives

2. Focus on objectives
Objectives

3. What are business objectives?
• The specific intended outcomes of
business strategy
• The anticipated end results of a
programme of activities
• Targets which the business adopts in
order to achieve its primary aims

4. A hierarchy of objectives
Increasingly
detailed
Increasingly
strategic

5. How the hierarchy works
• The objectives cascade down from the
mission getting progressively more specific
• Overall objectives are translated into more
specific objectives for different parts of the
business
• The hierarchy ensures that at each level the
objectives are consistent with the
objectives that are above them in the
hierarchy

6. Corporate v Functional Objectives
Master Servant
Corporate Functional

7. Mission…aim…objective
• Mission
– A qualitative statement of the business’s aims
• Aim
– A long term plan from which business
objectives are derived
• Objective
– A target which must be achieved in order to
realise the stated aim
– A time assigned targets derived from the goals
and set in advance of strategy

8. Main functions of objectives
• A clear statement of what needs to
be achieved
• A focus for all activity
• Targets for individual and group
achievement
• A means of measuring performance

9. How objectives can be used
• Implement the mission
• Provide a clear focus for decision making
• Provide a target
• Motivate employees
• Facilitate control of actual performance
• Provide a criteria for evaluating
performance
• Reduce uncertainty
• Provide a sense of unity

10. Objectives are central to strategy
• Objectives have a central role in strategic
decision-making
• Decisions are taken with objectives in mind
• A strategy is a course of action which enables
the business to meet its objectives
• The first part in a strategic plan is always
“where do we want to go”
• What follows is “how are we going to get
there”

11. What is corporate strategy?
• Corporate strategy is concerned with
deciding what business the organisation
should be in, where it wants to be, and
how it is going to get there
• Strategy is the game plan for…
– Satisfying customers
– Running the business
– Beating the competition
– Achieving corporate objectives

12. Corporate objectives are often stated in
terms of…
• Profit (value, margin)
• Return on investment (ROCE)
• Growth (profit, earnings per share)
• Market share
• Cash flow
• Sales revenue
• Shareholder value
• Corporate image & reputation

13. Factors influencing objectives
• Age of the business • State of the
• Size and legal status economy
• Competition
• Ownership
• Risk and attitude to
• Views of owners risk
and managers • Corporate culture
• Market conditions • Political factors
• Legislation • Social attitudes

14. Primary & secondary objectives
• Primary
– The ultimate, long term goals of the business
– These are the key strategic objectives such as
profit growth or shareholder returns
• Secondary
– Make a direct contribution to meeting primary
objectives
– E.g. sales growth will help business achieve
profit target
– Also known as tactical objectives

15. Strategic v Tactical objectives
Strategic Tactical
Focused on long-term Focused on short-term
Set by the Board Set by line management
Involve higher risk & uncertainty Relatively low-risk
Likely to involve significant Limited resources invested
investment / business resources
Difficult to change in the short- Relatively easy to change at
term minor financial cost
Stretching & challenging Realistic & achievable

16. The Mission Statement is…
• The overriding goal of
the business
• The reason for its
existence
• A strategic perspective
• A vision for the future

17. The mission model
• Purpose
– Contained in the mission statement
• Values and beliefs
– Reflected in business culture
• Strategy
– The competitive position of the business
• Standards and behaviour
– Policies and behavioural patterns expected of
employees
– Influenced by organisational culture

18. Five characteristics of a good mission statement
• Contains a formulation of objectives that
enables progress towards them to be
measured
• Differentiates the business from its
competitors
• Defines the markets or business in which the
firm wants to operate
• Is relevant to all major stakeholders - not just
shareholders and managers
• Excites, inspires, motivates & guides

19. Other characteristics of a good mission
statement
• Brief in length
• A very general statement
• Flexible-should be able to accommodate change
• Business specific and distinctive
• Communicates key values
• Realistic and achievable
• Based on consultation
• Supported by senior management

20. Criticisms of mission statements
• Not always supported by actions of the business
• Often too vague and general
• Often merely statements of the obvious
• Often seen as a PR exercise
• Sometimes regarded cynically by staff
• Sometimes not a true reflection of reality
• To mean anything they must be supported
wholeheartedly by senior management

21. Stakeholder
Perspectives

22. Defining stakeholders
Groups / individuals that
are affected by and/or
have an interest in the
operations and objectives
of the business

23. Categories of stakeholder
Internal Connected External
Shareholders Government
Customers Local
Directors
Suppliers community
Managers
Advisers Pressure
Employees
Consultants groups
Competitors Media

24. Stakeholders – main interests
Stakeholder Objectives Power and influence
Shareholders Share price growth, dividend Election of directors
Lenders Interest and principal to be Can enforce loan covenants
repaid, maintain credit rating,
Directors and Salary ,share options, job Make decisions, have detailed
managers satisfaction information
Employees Salary, job security, job Staff turnover, strike
satisfaction
Suppliers Long term contract, payment Pricing, quality
Customers Reliable supply, value for money Revenue / repeat business
Community Environment, local jobs, local Indirect via local planning and
impact opinion leaders
Government Operate legally, tax receipts, jobs Regulation, subsidies, taxation,
planning

25. Stakeholder power?
In the context of strategy,
what is important is the
power and influence that
each stakeholder has over
the business objectives

26. What determines stakeholder power?
• For stakeholders to have power and influence
the desire to exert influence must be combined
with the ability to exert influence on the
business
• The power a stakeholder can exert will reflect
the extent to which:
– The stakeholder can disrupt the business’ plans
– The stakeholder causes uncertainty in the plans
– The business needs and relies on the stakeholder

27. The inequality of influence
• Stakeholders do not have equality in terms of power
and influence
• Managers have more influence than environmental
activists
• A venture capitalist with a 40% of the share capital
will have a greater influence that a small shareholder
• Banks have a considerable impact on firms facing
cash flow problems but can be ignored by a cash rich
firm
• A customer that provides 50% of a business’
revenues exerts more influence than several smaller
customer accounts

28. Responding to stakeholder power
High level of Low level of
interest interest
High level Key players Keep them
of power Take notice of satisfied
them
Low level Communicate Can usually be
of power regularly with ignored
them

29. A business needs to make choices
• Every business has scarce resources
• Almost certainly cannot meet the needs
of every stakeholder group
• Some decisions are “win-lose”: i.e.
supporting one stakeholder means
another misses out
• “Win-win” is best – but often not
possible

30. Shareholder approach
• The traditional approach
• Business (management) acts in best
interest of shareholders / owners
• Principal aim is to maximise
shareholder returns
• Main focus is on growth & profit

31. Stakeholder approach
• Increasingly popular
• Business takes much more account
of wider stakeholder interests
• Approach based on consultation,
agreement, cooperation
• E.g. social and environmental
concerns become more important

32. Examples of common stakeholder interests
• Shareholders and employees have a common
interest in the success and growth of the
business
• High profits lead not only lead to good
dividends but also greater investment (retained)
in the business
• Suppliers have an interest in the growth and
prosperity of the business
• Local community, employees and shareholders
benefit from business involvement in the
community

33. Examples of conflicting interests
• Wage rises might be at the expense of
lower profits and dividends
• Managers have an interest in
organisational growth but this might be
at the expense of short term profits
• Expansion of production activity might
cause extra noise and disruption in local
community

34. Some popular solutions to stakeholder conflicts
Approach Description
Workers Councils Compulsory for some larger firms in the EU
Brings worker representatives from across depts &
activities for regular discussion of business issues
Stakeholder Outside representatives who hold a non-executive
Directors position on the Board
Arbitration / Formal processes of resolving conflicts between
Conciliation employer and employees (e.g. ACAS)
Share options & Widened participation of share ownership amongst
other all employees, helps align interests of shareholders
performance- and employees
related pay

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