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Business Studies
Revision
Pack 1 - Mission Statements, Objectives and decision making
A mission statement sets out what a firm is trying to achieve, i
...
the reason it exists
Commonly focus on:
• Corporate values
• Non-financial objectives
• Benefits of the business to the community
• How customers can be satisfied
Purpose of setting out a mission statement:
• Everyone in the firm knows what they're trying to achieve
• Provides a common goal (e
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something to believe in)
• All actions should be directed towards the same thing
• Make decision-making easier
• Motivation - sense of belonging & direction
• Corporate spirit
• Helps with the strategic planning
• Gives some transparency for investors - they understand the use that their capital will be put to
• Helps customers understand the ethics and objectives of the company
Only valuable if:
• Everybody believes in it
• Decisions are made in line with it
• It is lived out
Mission statement
Objectives set at all
levels contribute to
achievement of
corporate aims and
missions

Corporate aims
Corporate objectives

Downward
communication of
vision and goals

Functional objectives

Corporate aims and objectives
Qualitative
Corporate aims

Quantitative
Corporate objectives

Corporate aims are long term plans of the business from
which its corporate objectives are derived

Corporate objectives are medium to long term goals
established to coordinate the business

Aims are qualitative targets set by the directors of the
business

These objectives enable the mission and is to be turned
into something more quantifiable, which sets out clearly
what is to be achieved

These aims should provide guidance for:
-Setting corporate objectives
-Setting functional objectives
-Decisions taken in by management

Objectives should always be SMART
Specific, Measurable, Achievable, Realistic, Time bound
...

Survival is likely to become a key objective when:
- It is a new business
- Recession
- Competition
- New entrees to the market
Profit maximisation
• Profit is maximised when the difference between sales revenue and total costs is at its greatest
Shareholders will be satisfied the most as their dividends will increase
Growth
• If a firm grows, it should be able to exploit its market position and earn greater profits
Businesses may achieve economies of scale & more market share through growth
however could face more competition, more attention and therefore the possibility of a takeover
Market share
• An objective (and achievement of) increasing market share will bring other benefits:
- By definition it should mean more sales
- More sales means more income
- Increased perception of the brand
Businesses may expand their product portfolio in order to gain market share
However there are additional costs
Improving corporate image / ethics
• Having a strong corporate image should translate to physical sales
...
It concerns 2 key issues:
1
...

2

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