Mission, corporate objectives and Strategy

Definition: An organisation's aims or long-term intentions, its ultimate purpose; a business mission is sometimes the same as its corporate aims

Factors influencing the mission of a business:

• The size of a business
• the range of activities undertaken by a business
• The nature of owners and important stakeholders in a business
• Changes over time
• The actual performance of an organisation
• External factors (e.g. PESTLE)
• A business' strengths and opportunities
• The extent to which a business demonstrates social responsibility in its actions

Definition: goals of the whole organisation rather than of different elements of the organisation. They are set in order to co-ordinate the activities of, give sense of direction, and guide the actions of the organisation. They are dictated by the mission or corporate aims of an organisation.

Internal influences on objectives and decisions:

• business ownership
• the relative power of stakeholders
• whether a business adopts a traditional (or shareholder value) perspective
• Ethics
• Business culture
• Resource constraints (financial resources, human resources, physical resources)

External influences on objectives and decisions:

• pressure for short-termism
• the external environment
• changes in economic policy
• environmental factors
• demographic trends
• actions of competitors

Long and short-term influences on objectives and decisions:

• a financial crisis (focus on short-term survival rather than growth)
• A firm may have a long-term objective of improving profitability, but in short term, profitability might be sacrificed in order to try to eliminate a competitor
• In a recession, emphasis on survival, whereas over the longer term and in a boom, the potential for high profits may encourage other objectives, (e.g. helping the environment, local community, or diversification)
• Changes in government policy may force a company to adopt different short-term priorities
• Negative publicity

Strategy Definition: The medium to long-term plan through which an organisation aims to attain its objectives

• usually planned at board of directors level, but have an impact at functional levels

Tactics Definition: The means by which a strategy is carried out; a range of different tactics may be used as part of a single strategy

Functional decision making Definition: tends to be short to medium term and is concerned with a specific functional area rather than overall policy. Functional decisions are usually taken to support the implementation of strategic decision and are usually made by middle management

Strategic decision-making definition: Concerns the general direction an overall policy of an organisation. Strategic decisions have significant long-term effects on an organisation and therefore require detailed consideration and approval at the senior management level. They can be high risk because the outcomes are unknown and will remain so for some time

SWOT analysis definition: 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 its opportunities and threats

Internal audit: involves looking at current resources, how well they are managed, and how well they match up to the demands of the market and to competition. It needs to range across all aspects of each of the functional areas. An internal audit is essentially an assessment of the strengths and weaknesses of a business in relation to its competitors. These strengths and weaknesses are within the direct control of a business

external audit: involves looking at the possibilities for development in different directions in the future. One method of analysing these external factors is to categorise them according to PESTLE analysis. And external audit is essentially an assessment of the opportunities and threats facing a business in the general business environment, that is the factors that have the potential to benefit the organisation and the factors that have the potential to cause problems for the organisation. Opportunities and threats are outside the direct control of the business

Advantages:

• Provides a structured approach to assessing the internal and external influences on an organisation’s performance
• Undertaking a thorough internal and external audit of an organisation is an excellent basis to which the business can make decisions
• Using the information, leaders are able to analyse what needs to be done to counter the threats faced by their organisation, to seize the opportunities available to it, to build on its existing strengths and to overcome any weaknesses it has
• One way of developing competitive advantages for a business to use a SWOT analysis to find the best combination of relative strengths and the absence of critical weaknesses to use against competitors in the market in which it operates
• Highlighting current and potential changes in the market and the external environment encourages an outward looking approach
• Comparing its SWOT analysis with that of a major competitor can help to identify the true strengths and opportunities for business and for its competitor
  

Disadvantages

• Can be time consuming and the situation, especially the external factors, may change rapidly. This means that what might have been a strength in the past may now be a weakness, or what previously a threat may now be an opportunity