A) Development of corporate objectives from mission statement/corporate aims
Hierarchy of business objectives:
Mission statement – This is the long term objective of the business that includes the overriding goal of the business and the reason why it exists. This is a relatively brief outline of the business and is includes a relatively broad number of topics.
Corporate objectives – These are objectives that relate to the business as a whole and are set by the senior management of the business. The objectives set are often aimed at satisfying shareholder and act as a framework for setting more detailed objectives for the functional objectives.
Department/functional objectives – These objectives go into more detail of the specifics to how the corporate aims will be met. For example, an objective may be for the marketing department to increase sales by 5% each quarter. The department objectives should flow from the corporate objectives.
SMART objectives:
Specific – The objectives set need to be clear as to what they plan to do e.g. a specific number or percentage.
Measurable – The objectives need to be able to be measured so the business can see how it’s progressing and where it is in relation to its objectives.
Achievable – The objectives need to be achievable, but at the same time it needs to stretch the business so that it is difficult to achieve. Therefore the business has to work hard in order to achieve the objective.
Realistic – The objectives set should be sensible thus allowing the business to achieve it.
Timed –The business needs to set a date for when the objective should be achieved e.g. in a month or a year.
B) Critical appraisal of mission statements/corporate objectives:
- Purpose – The purpose of the mission statement is to set out the overall aim of the business and what it’s long term objectives are either for the business or also external to the business.
- Intended audience – The mission statement is written for the stakeholders of the business.
- Relation of corporate strategy to the mission statement – The corporate strategy should flow from the mission statement and outline the businesses objectives.
- Uses of the mission statement:
- Track progress – The mission statement helps to track the progress of the business and how it is doing compared to its overall objective. This can be used in order to make sure that the business is heading in its intended direction.
- Public relations – A mission statement can help inform the public and other stakeholders of the purpose of the business and what it plans to achieve. This can help with public relations as they can see what the aim of the business is.
- Strategic planning – The mission statement gives and outline of what the business wants to achieve. As a result of this, it is a good starting point for the business in helping them set their corporate objectives. This makes sure that the corporate objectives match the overall aims of the business so that they’re heading in the right direction.
Limitations of the mission statement:
- Not always supported by business actions – Sometimes the actually actions of the business will not be supportive of their mission statement. This can result in the mission statement being less beneficial to the business as they’re making no effort to achieve the mission statement set.
- Too vague – The mission statement often lacks detail and doesn’t say how the business will actually meet the aims that it has set.
- Viewed as public relations stunt – Mission statements are often viewed as an attempt to enhance public relations rather than as a useful business tool for the business. This can often result in the mission statement being viewed cynically.