Mission Statement - These set out the reasons why a business exists and what it is trying to achieve.
Aims and Objectives
- Aims are determined by owners and managers
- They will change over time as the business grows and the business environment changes
Corporate Aims & Objectives
- Corporate aims - The long-term intentions of a business
- Corporate objectives: Targets that must be achieved in order to realise the aims of the business.
- Corporate aims and corporate objectives are used to help the business achieve what is set out in the mission statement
SMART
Specific
Measurable
Agreed
Realistic
Timed
Short Term versus Long Term objectives
The choice of short term or long term objectives depends on:
- Financial position
- Market position
- Economic Conditions
- Government Policy
- Bad publicity & Social change
In the short term a business may aim to survive but in the longer term they may aim to make a profit
Common Objectives
The most common objectives are concerned with:
- Profit -This is the number one objective for most firms in the private sector. Profit = Total revenue – total costs. Profits can be used to reward workers and reinvest in the business so it can grow
- Growth - Firms may set growth or increasing their market share as an objective. If a firm wants to grow it will see a decrease in profits as it will have to incur costs to do so
- Social Considerations
- Employee Welfare
Other objectives
Social considerations – these are objectives which influence society or a businesses local community
Employee welfare – some businesses set objectives for their workers welfare
Conflicting Objectives
Objectives may often be in conflict:
Growth vs. Profit – To grow in size a business will need to spend more money which will reduce profit
Profit vs. Employee Welfare – It is often expensive for a business to ensure that its workers are well looked after
Stakeholder Objectives
Stakeholders are individuals or groups who are affected by the actions of the business
Stakeholders include:
- Employees
- Local community
- Customers
- Suppliers
- Shareholders Society
Stakeholder Interests
Stakeholders often have conflicting interests:
- Shareholders key aim is to make a profit this may be in conflict with employees who want a stable job and training
- Shareholder interests may also be in conflict with suppliers as to increase profitability prices to suppliers would have to decrease
- Shareholders and the local community could be in conflict – it is not necessarily profitable to help the local community
Summary
- Mission statements set out an organisations purpose and key activities
- Corporate aims are long term goals of a business
- Corporate objectives are the steps taken to meet the aims
- Common aims include profit and growth
- Objectives can be short or long term
- If objectives are short vs. long term it depends on the firms financial and market position, the economy and government policy
- Objectives often conflict with one another e.g. profit and growth
- Stakeholders are any groups who have an interest in a business
- Shareholders are individuals who own the business, their key objective is profit and this often conflicts with the objectives of other stakeholders
- Organisational Culture is the set of values, attitudes and beliefs in an organisation
