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Corporate Aims, missions and goals

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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

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

Focus on core capabilities Increasing market standing

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Corporate objective

Objective: maximising shareholder wealth Factors driving share holder’s valueStrategyTime taken for a decision to create a competitive

advantageOperationsIncreasing salesIncreasing profit marginsReducing tax burden

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Corporate objective

InvestmentEfficient working capital managementEfficient fixed capital managementFinancingIdentifying 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

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

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

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

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

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

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