3.7.1 Mission, corporate objectives and strategy

Success of business depends on turning aim into practice. Act as basis for setting organisaiton's objectives - targets must be achieved if aims to be realised. Success or failire of each decision w/in firm can be judged by extent to which meets business objectives. Aloows delegation of authority w/in organisation, while at same time maintaining co-ordination.

Attempt to put corporate aims into words that inspire. Hoped by summarising LT direction of organisation, focus provided that helps inspire employees to greater effort + ensure depts work together. W/o common purpose, each area of firm may have diff aims + choose to move in conflicting directions. Not every company written mission statement - some clear staff 'live the mission', don't eed to write it down eg M&S.

Shown by Nike mission - emphasises desire to provide innovative products for athletes. Shows why company exists.

Eg Pret A Manger - not just believes in natural, fresh food, also business always:
 - uses packaging made from recycled materials + can be recycled in future
 - takes care to source products from suppliers that treat staff fairly
 - wants to push customer to try new things, especially from sustainable sources
 - values of business key part of culture, should inc way staff trated + other ethical considerations

Standards set by managers, behaviour expected from staff.

Medium-long term plans adopted by business to make aims + mission achievable.

Corp obs medium-LT targets for whole enterprise - some break down into time period. Take company's mission, turn it into smth measurable. Helps diff business functions work together towards clear target.

After objs set + 'signed off' by board, business can decide on corporate strategy - plan for meeting objs. Risk - strategy may stray from mission. Could happen if objs not aligned fully w/ mission. Objs need to line up w. mission + strategy w/ objs.

Increasingly presented by board of directors of large companies as modern equivalent of profit maximisation. Share prices reflect present value of dividends company expected to pay out in future. Result - means taking actions that maximise price of shares on stock market.

Motivation - natural desire to see business achieve full potential or helping defend firm from hostile takeover bids. If firm biggest, nobody could take over. 

Diversify to reduce dependence on one product/market. What Tesco did b/ween 2000 + 2013, but then abandoned. 

Some argue plc bosses act so profit objs 'satisfice' rather than 'maximise' - scope for more profit growth, doing enough but not the maximum. Keeps shareholders quiet as still receive dividends, allows them to decide on other objs eg to diversify.

Ambitions of those leading company.

Financial influences.

Human Resourse influences - senior managers have to take into account qualities + abilities of senior staff.

Taste, fads + fashion.

Changing legislation - 1st Sept 2014, new energy-saving EU rules on vacuum cleaners. Shoppers worried no longer be able to buy vacuums w/ big engines, cleared shops in weeks leading up to change. 

For firms w/ already profitable, growing business + reasonable insulation from op risks - final piece is to establish image that helps add value to product range + gives consumer confidence to assume the best of the company.

To have high market standing, public needs to believe business operates as force for good eg through products, employment practices or pos approach to social responsibilites - all can be managed whilst commitment + resources available. 

Usually b/c trading difficulties made business reporters critical of managment - scrutinise each 6 monthly profit statement. Expectation may make leader take 'short-termist' view eg reducing capital spending etc.

Main types of ownerships:
 - plc
 - ltd
 - family run

Ltds buy businesses either w/ intention of 'asset *********, or to rebuild business in order to sell it. Focus is ST. Only family structure likely to be thinking LT.

Strategy regarded as route map to get business from here to there over medium-long term. Tactics responses to ST opps/threats. Sometimes tactical opps may be irrelevent to or diversion from route map.

When major strategic decision made, new objs set - affect functional objs + strategies + decision making. Each of 4 functions w/in business (marketing, finance, ops + people) has own objs - all 4 sets must match organisation's corp objs + make strategy that makes overall targets reachable.

To provide sufficient insight into current + potential position of business to emable senior execs to make sound decisions based on good evidence.

2 main ways:
 - top-down process - controlled by boss, carried out by management consultants. Adv - dispassionate. Unfortunately, long-established staff know threat posed by outside consultantss , try to hide weaknesses that would lead to job losses. Risk will lack insight required for helpful SWOT analysis.
 - ideal, conducted in consultative manner, boss spending time in every key dept, talk to staff informally. Might be elements of democratic delegation, middle managers invited to conduct own SWOTs + discuss findings w/ boss. Highlights benefit of appointing outsider to top job. No staff feel worried about what they say when blame for weaknesses can be pinned on previous leadership team.

Broken down into 2 parts:
 - strengths + weaknesses represent current situation
 - opps + threats external, largely outside management control.

Business situation needs to be considered in relation to competitors, useful to analyse strengths + weaknesses w/ help of benchmarking - shows how business performs on key variables compared w/ best in industry.

External factors that can give rise to opps/threats:
 - econ changes
 - tech change

Starting point to analysing S + W - distinguing b/ween those that are + those that matter. To address issues, use concept of KPIs: key performance indicators. Number that business acknowledges to be proper measures of S/W. Might inc sales per employee, absenteeism, image ranking w/in market sector etc. 

What business need - few KPIs that will add up to achievement of overall business goals. Most common KPIs:
 - life-for-like sale - show sales revenues this year compare w/ last, eliminate any diffs in shop floor space
 - market share
 - capacity utilisation

Business should use KPIs to address S + W by breaking them down into component parts eg capacity utilisation broken down into size of capacity + level of customer demand.

 - Demography
 - New laws + regulations
 - Technological factors
 - Commodity prices - prices of internationally-traded goods inc oil, copper, wheat + cocoa - usually bought by firms as raw material
 - Economic factors

Organisations seem to spend increasing amount of time + senior manpower on attempting to influence/control environment - can be logical. Many business began to 'lobby' MPs - origianlly, local businesses coning to London to put cases to MP who would then ask q's in parliament - now, lobbying is industry which allows unelected professional lobbyists access to Minister or even PM.

Comapnies want to encourage favourable legislation, discourage unfavourable legislation + switch balance of taxation away from companies + towards households. Only problem when legitimate influence goes too far. Young mothers, skilled workers + those w/ disabilities - categories as much right to lobby as business - don't have as much money/access to those w/ power.