Transcript Corporate Aims, missions and goals

Corporate Aims, missions and
goals
Murad Rattani
Corporate aims
Corporate aims express the long term
intentions of the organization to develop in a
certain way. Their purpose is to create a
common vision which everyone in the
organization should work towards achieving.
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Corporate objectives
Goals or objectives are the targets which must
be achieved in order to fulfil the corporate
aims.
 Corporate objectives are the goals that the
whole organization is trying to achieve. The
corporate aims, which are often set out in a
mission statement, form the basis upon
which these targets are developed.
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Corporate objectives
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Maximising the amount of profit earned by
the organization.
Maximising shareholder’s wealth (share
prices)
Growth in the size of the firm
Diversification to spread risk to counter
seasonal decline in the sales of the product.
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Corporate objectives
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Focus on core capabilities
Increasing market standing
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Corporate objective
Objective: maximising shareholder wealth
 Factors driving share holder’s value
Strategy
Time taken for a decision to create a competitive
advantage
Operations
Increasing sales
Increasing profit margins
Reducing tax burden
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Corporate objective
Investment
Efficient working capital management
Efficient fixed capital management
Financing
Identifying the cost of capital
(Adapted from Shareholder Value by Richard Barfield, published in
Accountancy, October 1991)
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Corporate strategy
Corporate strategy is the organization’s plan of
action which, when implemented, will lead to
the achievement of the corporate objectives.
Strategy cannot be considered before the
firm’s goals are clearly established.
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Business strategy
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Managers of the business should develop strategies
to achieve the organizational goals and objectives.
This is also called corporate strategy and drafts
layout of actions to achieve corporate goals and
objectives. It has its implications on the firm’s
resources. Basically it means relating firm’s
strengths to exploit the opportunities in the
competitive environment or trying to find out a
strategic fit.
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Strategy formation
Strategy formation involves developing
objectives, utilizing resources, planning
actions to employ organization’s system to
design strategy which exploits opportunities
in the competitive environment.
It involves forming strategic fit between
company’s resources and strengths and the
environment.
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Hierarchy of strategy
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Corporate
Divisional
Operational/Functional
Individual via appraisal system
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Mission Statement
A mission statement is a qualitative statement
of the organization’s aims. It uses language
intended to motivate within the firm and to
convince those outside it of the company’s
sincerity and commitment.
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Mission Statement
Mission statement expresses aims (long term
intentions) of the company. To develop a
strong mission statement it is necessary to
link each of the four elements of the mission
model so they reinforce each other.
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The mission model (After Campbell, Devine
and Young, 1990)
The four elements of mission statement model are:
1.
Purpose: why the company exists
2.
Values: what the company believes in
3.
Standards and behaviours: the policies and
behaviour patterns expected of company
employees.
4.
Strategy: the competitive position of the company
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Examples of Mission statements which attempt to
establish purpose
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The Body shop-Tirelessly work to narrow the gap between
principle and practice, whilst making fun, passion and care part
of our daily lives.
Coca-Cola-Our mission is to get more people to drink Coke
than water.
Pret A Manager-Our mission is to sell handmade extremely
fresh food.
Unilever-Raise the quality of life.
James Dyson-Long-term business success based on newly
invented, innovatively designed products.
Conservative Party-Our mission is to create the greatest
volunteer party in the Western democratic world.
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Elements of Mission Statement Model
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Purpose (Reason for the organization’s existence):
Provides employees with the justification of their
work.
Values: the values of an organization reflect the
most commonly held beliefs and assumptions
among the employees. In any workplace there will
be an accepted view of ‘the way we do things around
here’. This unwritten code is called the culture of the
business. These values influence people’s attitudes,
their approach to management and how they make
decisions.
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Values: An organization’s mission statement
provides an opportunity to shape this
business culture. These values motivate
them to work towards the organization’s
objectives and goals.
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Criticisms over Mission Statement
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Time consuming: time could be spent more
effectively on some other aspects of the business.
Merely to gain publicity: some companies prepare
large mission statements just to impress and gain
publicity.
Mission statements are much harder to implement
in a diversified organizations with multiple
departments and which compete in a range of
unrelated markets.
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References
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Ian Marcouse, The Business Studies
Teachers’ Book (ISBN: 0340-73763-8), 1999
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