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. Murad Rattani

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. Murad Rattani

Corporate objectives • 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. Murad Rattani

Corporate objectives • Focus on core capabilities • Increasing market standing Murad Rattani

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 Murad Rattani

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) Murad Rattani

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. Murad Rattani

Business strategy • 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. Murad Rattani

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. Murad Rattani

Hierarchy of strategy • Corporate • Divisional • Operational/Functional • Individual via appraisal system Murad Rattani

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. Murad Rattani

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. Murad Rattani

The mission model (After Campbell, Devine and Young, 1990) The four elements of mission statement model are: • Purpose: why the company exists • Values: what the company believes in • Standards and behaviours: the policies and behaviour patterns expected of company employees. • Strategy: the competitive position of the company Murad Rattani

Examples of Mission statements which attempt to establish purpose • 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. Murad Rattani

Elements of Mission Statement Model • 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. Murad Rattani

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. Murad Rattani

Criticisms over Mission Statement • 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. Murad Rattani

References • Ian Marcouse, The Business Studies Teachers’ Book (ISBN: 0340-73763-8), 1999 Murad Rattani

Corporate Aims, missions and goals