Vision and Mission Statements

• Having a vision means to have an image of an ideal situation in the

future.
• A vision statement therefore outlines an organization’s aspirations
(where it wants to be) in the distant future.
• Example: “To be the leading sports brand in the world” – Adidas
• Vision statements also tend to relate to attainment of success.
• Having a mission means to have a clear purpose.
• A mission statement tends to be a simple declaration of the
underlying purpose of an organization’s existence and its core
values. Example school mission “Provision of wide opportunities and
achievements for all”.
• Unlike objectives, the mission statement does not have a distinct
time frame and tends to be qualitative than quantitative.
• A well produced mission statement is clearly defined and realistically
achievable.
• It provides a sense of direction, guides decision making and unifies
all people and corporate cultures within the organization in an
attempt to achieve the overall vision.
• Vision Statement: To accelerate the world’s transition to
sustainable energy.
• Mission Statement: To create the most compelling car company of
the 21st century by driving the world’s transition to electric
vehicles.
Main Differences between Vision and
Mission
• The vision statement addresses the question “what do we want to
become?” Whereas the mission statement deals with the question
“what is our business?”
• Vision statements are focused on the very long term, whereas
mission statements can focus on the medium or long term.
• Hence, mission statements are updated more frequently than vision
statements.
• Vision statements do not have to be actual targets that must be
achieved (this is the purpose of setting mission statements). Instead,
vision statements allow people to see what could be.
• The mission statement tends to outline the values of the business
i.e. its beliefs and guiding principles that set the framework for how
managers and employees operate on a daily basis.
Critics to Vision and Mission Statements
• Critics argue that such statements are no more than a public
relations stunt. After all, the ultimate purpose of most businesses,
they argue, is to maximize profits.
• Constructing vision and mission statements can also be very time
consuming, it is very difficult to draft a statement that caters for all
the dynamics of a business.
• Even the best thought-out statements might not be supported by all
stakeholders.
Steps in Setting Mission Statements
1. Define the organization, i.e what it is.
2. Outlines what the organization aspires to be (in line with its vision
statement).
3. Limited enough to exclude certain ventures.
4. Broad enough to allow for the growth in a creative or innovative place.
5. Distinguishes the organization from others.
6. Serves to evaluate current business activities.
7. Phrased clearly so that it is understood by all.
Aims, Objectives, Strategies & Tactics
1. Aims are the general and long-term goals of an organization.
• They are broadly expressed as vague and unquantifiable statements.
Example: “To provide high quality education to all”
• Aims serve to give a general purpose and direction for an
organization and are often expressed in a mission statement.
• Aims are usually set by the senior directors of the organization.
2. Objectives are the short to medium term and specific targets an
organization sets in order to achieve its aims.
• They are more specific and quantifiable (measurable). Example: “A
school’s objective could be to achieve a 95% pass rate within two
years”.
• Objectives must be consistent with the firm’s aims.
• They can be set by managers and their subordinates.
• Without having clear aims and objectives, organizations have no
sense of direction or purpose.
 Organizational aims and objectives are important for three
reasons:
1. To measure and control: Aims and objectives help to control a
firm’s plans as they set the boundaries for business activity.
• They provide the basis for measuring and controlling the
performance of the business as a whole.
2. To motivate: They can help to inspire managers and employees to
reach a common goal, thus helping to unify and motivate the
workforce.
• They also encourage managers to think strategically and plan for the
long term.
2. To direct: Aims and objectives provide an agreed clear focus (or
sense of purpose) for all individuals and departments of an
organization.
• They are the foundation for decision making and are used to devise
business strategies.
Differences Between Aims and Objectives
Aims Objectives

What the business wants to achieve What the business have to do to achieve
the aims
Not necessarily time-bound Time bound

Vague or abstract goal Specific and measurable target

What a business wants to happen What a business needs to happen

Set by senior leaders Set by managers or their subordinates

3. Strategies are the medium to long term plans of action to achieve
the strategic objectives of an organization.
4. Tactics are short term methods used to achieve an organization’s
tactical objectives.
• Both strategy and tactics serve matching purposes, i.e how a
business plans to get to where it wants to be.
• Once a business has decided on its short and long term goals, it can
then decide on the most suitable methods to achieve these targets.
Levels of Business Strategy
1. Operational Strategies: The day to day methods used to improve
the efficiency of an organization.
• They are aimed at trying to achieve the tactical objectives of a
business.
• Example: A restaurant might investigate how to reduce customer
waiting time without compromising the quality of its service.
2. Generic Strategies: Those that affect the business as a whole.
• These generic strategies look at ways in which a business can gain a
competitive advantage in order to meet its goals.
3. Corporate Strategies: They are targeted at the long term goals of a
business.
• They are used to achieve the strategic objectives of an organization.
• Example: A firm might aim for market dominance through mergers
and takeovers of rivals in the industry.
 Tactical Objectives: Short term goals that affect a section of the
organization.
• They are specific goals that guide the daily functioning of certain
departments or operations.
• Example: Raise sales by $10 million within the next year.
• Tactical objectives tend to refer to targets set up for up to 12
months. Examples: Survival, sales revenue maximization.
 Strategic Objectives: The longer term goals of a business.
a) Profit maximization.
b) Growth. Usually measured by increase in sales revenue or market
share.
c) Market standing. This refers to the extent to which a business has
presence in the industry.
d) Image and reputation.
• In practice, businesses have a combination of these strategic
objectives.
• These objectives will also change from time to time, such as survival
being a key objective if a firm is threatened by a takeover.
• The organizational culture and whether a business operates in the
private or public sector are also factors that affect the aims and
objectives it sets.
 Practical Example:
 Aim: Become the market leader in the industry.
 Objective: Increased market share.
 Strategy: Expanding into new markets.
 Tactic: Improved market research.
The Need for Changing Objectives
A. Internal Factors: Those within the control of the organization.
1. Corporate culture. The accepted norms and customs of a business.
• Firms with a flexible and adaptable organizational culture are more likely to
have innovative objectives over time.
2. Type and size of organization: Any change in the legal structure of
a business is likely to cause a change in its objectives.
3. Private versus public sector organizations.
4. Age of the business.
5. Finance.
6. Risk profile.
7. Crisis management.
B. External Factors: Those beyond the control of the organization.
1. State of the economy.
2. Government constraints.
3. The presence and power of pressure groups.
4. New technologies.

Objectives have the potential to conflict. For example, employees

may demand better pay and working conditions which may
subsequently reduce profits, at least in the short term.
Ethical Objectives
• Ethics are the moral principles that guide decision making and
strategy.
• Morals are concerned with what is considered to be right or wrong
from society’s point of view.
• Business Ethics: The actions of people and organizations that are
considered to be morally correct.
• An ethical and socially responsible business acts morally towards
workers, customers, shareholders and the natural environment.
• Socially responsible businesses are those that act morally towards
their stakeholders such as their employees and the local community.
• These obligations are known as corporate social responsibilities
(CSR).
• There are three broad views and attitudes towards the role of
businesses in delivering CSR:
1. The self-interest (non compliance) attitude.
2. The altruistic attitude.
3. The strategic attitude.
• To achieve their ethical objectives, an increasing number of
businesses have adopted an ethical code of practice and publish this
in their annual report.
• The code of conduct refers to the documented beliefs and
philosophies of the business.
• It is important because people need to know what is considered
acceptable or not acceptable within an organization.
Advantages & Limitations of Ethical
Behaviour
Advantages Limitations

Improved corporate image Compliance costs

Increased customer loyalty Lower profits

Cost cutting Stakeholder conflict

Improved staff morale and motivation Ethics and CSR are subjective
The Evolving Role and Nature of CSR
• The nature of CSR is rather subjective, what is considered right or
wrong is largely based on public opinion, which tends to change over
time.
• Changes in societal norms means that businesses need to review
their CSR policies and practices from time to time.
• For instance, objectives and strategies have changed in recent times
due to a more positive attitude towards the hiring and promotion of
female staff.
• Media exposure in many countries has meant that large
multinational companies are expected to donate part of their profits
to charity.
• Investors are more wary of placing their money with unethical firms,
such as those that employ child labour.
• Through pressure group action and educational awareness, an
increasing number of businesses are actively trying to do their part
for the environment.
• Climate change and environmental damage are huge concerns of
governments and citizens around the world, so businesses are
changing their objectives to reflect their part in the preservation of
the planet.
• CSR is further complicated when businesses operate in different
countries.
• What is considered acceptable in one country may be totally
undesirable in others.
• Some analysts argue that it is not the role of managers to decide
what is right or wrong. This is because managers do not use or risk
their own money when making decisions about what they personally
believe to be socially responsible.
• It can be difficult to measure or monitor the extent to which a
business is socially responsible due to the subjective and evoloving
nature of CSR.
• The evolving role and nature of CSR means that businesses must
adapt to meet their social responsibilities, ways to do that;
1. Providing accurate information and labelling.
2. Adhering to fair employment practices.
3. Having consideration for the environment.
4. Active community work.
• Acting responsibly can help to improve a firm’s reputation, but the
compliance costs will add to its expenses.
• For staff to help the organization meet its ethical objectives, they
must be convinced that CSR is in their best interest too.
Encouraging CSR
1. The media. Encouragement, exposure or pressure from the media.
2. Ethical codes of practice. Provide guidelines for the workforce.
3. Training. Updating employee skills in delivering CSR, e.g customer care
4. Government assistance. Subsidizing the purchase of energy efficient
equipment and machinery.
5. Government legislation. Minimum wage laws or pollution fines.
6. Competitors’ actions.
• Whether a business acts in a socially responsible way depends on
several interrelated factors;
1. The involvement, influence and power of various stakeholders, such as
pressure groups.
2. Corporate culture and attitudes towards CSR.
3. Societal expectations, i.e. the general public’s awareness of concerns for
CSR issues.
4. Exposure and pressure from the media.
5. Experience, quite often it takes a crisis or bad experience to precipitate
attention to CSR.
6. Compliance costs.
7. Laws and regulations.
SWOT Analysis
• SWOT analysis is a simple yet very useful decision-making tool.
• SWOT is acronym for Strength, Weaknesses, Opportunities and
Threats.
• It can be used to assess the current situation of a business
organization.
• SWOT analysis considers both internal factors (strengths &
weaknesses) and external factors (opportunities & threats) that are
relevant to the organization under investigation.
1. Strengths are the internal factors that are favorable compared
with competitors.
• Example: Strong brand loyalty, a good corporate image or highly
skilled workers.
• Strengths need to be developed and protected.
2. Weaknesses: Internal factors that are unfavorable when compared
with rivals, i.e they create competitive disadvantages.
• Weaknesses are therefore likely to prevent or delay the business
from achieving its goals.
• Hence, to remain competitive, the business need to reduce or
remove its weaknesses.
3. Opportunities: The external possibilities (prospects) for future
developments, i.e changes in the external environment that create
favorable conditions for a business.
• Example: India and China present many business opportunities, such
as huge customer base and rapid economic growth.
4. Threats: The external factors that hinder the prospects for an
organization, i.e. they cause problems for the business.
• Examples: Technological breakdowns, product recalls changes in
fashion, price wars, oil crises, recessions, natural disasters, and the
outbreak of infectious diseases.
• SWOT analysis can provide a framework for;
1. Competitor analysis, e.g. the threats posed by a rival or the strengths of a
competitor.
2. Assessing opportunities, e.g. the development and growth of the
organization.
3. Risk assessment, e.g. the probable effects of investing in a certain project
or location.
4. Reviewing corporate strategy, e.g the market position or direction of the
business.
5. Strategic planning, e.g. the decision to diversify or expand oversees.
 SWOT analysis should not be a list of advantages and disadvantages
of a decision or issue. Instead it is a situational analysis in relation to
the external and internal factors that relate to an organization.
Advantages & Disadvantages of SWOT Analysis
SWOT Analysis Template
 SWOT Analysis Template

• What might be strength for one firm such as brand reputation, might actually
be weaknesses for another business. Same goes for threats and opportunities
The Ansoff Matrix
• The Ansoff matrix is an analytical tool that helps managers to choose
and devise various product and market growth strategies.
1. Market Penetration: This is a low risk growth strategy as
businesses choose to focus on selling existing products in existing
markets, i.e to increase market share of current products.
• This might be achieved by offering more competitive prices or by
improved advertising to enhance the desirability of the product.
• In addition to attracting more customers, firms might attempt to
entice existing customers to buy more frequently, perhaps by
offering customer loyalty schemes.
• Brands might also be repositioned to achieve market penetration.
 Advantages:
1. Business focuses on markets and products that it is familiar with.
Hence, market research expenditure can be minimized.
2. It is also the safest of the four growth strategies.
 Limitations:
1. Competitors, especially stronger rivals, will retaliate to firms trying
to take away their customers and market share. This can lead to
aggressive reactions, such as price wars, thereby harming profits.
2. Also, once existing markets become saturated, alternative
strategies are required if the business is to continue its growth.
2. Product Development: This is a medium risk growth strategy that
involves selling new products in existing markets.
• Product development tends to rely heavily on product extension
strategies to prolong the demand for goods and services that have
reached the saturation or decline stage of their product life cycle.
• Product development is also reliant on brand development to appeal
to the existing market.
• Product development is also a reason for acquiring other companies.
3. Market Development: This is a medium risk growth strategy that
involves selling existing products in new markets, i.e an
established product is market to a new set of customers.
• This might be done through new distribution channels such as selling
the existing product overseas.
• Prices could also be changed to attract different market segments.
• A key advantage of this growth strategy is that the firm is familiar
with the product being marketed.
• However, the success of product in one market does not necessarily
guarantee its success in other markets.
4. Diversification: This is a high risk growth strategy that involves
selling new products in new markets.
• In addition to gaining market share in established markets, a key
driving force for diversification is to spread risks by having a well
balance product portfolio.
• Diversification is also suitable for firms that have reached saturation
and are seeking new opportunities for growth.
• One way to diversify is to become a holding company.
• Holding company is a business that owns a controlling interest in
other diverse companies, i.e it owns enough shares to be able to
take control of other businesses.
• Holding companies (parent companies) can benefit from having a
presence in a range of markets in different regions of the world.
• There are two categories of diversification;
1. Related diversification occurs when a business caters for new customers
within the broader confines of the same industry
2. Unrelated diversification refers to growth by selling completely new
products in untapped markets.
• Related diversification is less risky as it builds on the product and market
knowledge of the business.
• Nevertheless, diversification remains the riskiest of the four growth
options as the business is not on familiar territory when launching
new products in markets it has little, if any experience of.
• New distribution channels also need to be established and this could
be time consuming and costly.
• Such distractions can mean an organization loses focus of its core
business, with serious consequences.
 Businesses must be able to assess the effectiveness of their objectives,
one way is to set SMART objectives.
 Specific
 Measurable
 Achievable
 Realistic
 Time constrained

Example: To generate 20% revenue from online sales before 31 December.