Mission, Values & Objectives (AQA A Level Business): Revision Note

Mission and values

• Before a business can choose a strategy, it needs a clear sense of what it exists to do and what it stands for

• A business's mission and values shape its culture and identity and guide decision-making at every level

Mission statements, vision statements and values

• A mission statement is a brief statement of a business's core purpose

  • It explains why it exists beyond simply making a profit

Example

Tesla's mission is "to accelerate the world's transition to sustainable energy".

This mission drove its decision to open-source some of its patents so other manufacturers could develop electric vehicles more quickly

• A vision statement describes what the business aspires to become in the future, giving it a long-term sense of direction to aim towards

Example

IKEA's vision is "to create a better everyday life for the many people".

This vision has guided its strategy of keeping prices low through flat-pack design and self-assembly, rather than competing on luxury or exclusivity

• Values are the principles and standards of behaviour that guide how a business operates and treats its stakeholders

  • Examples include honesty, sustainability or fairness to staff

Example

The John Lewis Partnership's value of treating staff as co-owners of the business determines its decisions on pay, profit-sharing and working conditions across the whole company

The purpose and value of mission, vision and values

• They guide decision-making

  • Senior managers can use the mission and values as a reference point when facing difficult strategic choices

  • This helps to keep decisions consistent even as circumstances change

• They can build staff motivation and shared purpose

  • Employees who understand and believe in a business's mission may find their work more meaningful

  • This links to Herzberg's view that a sense of achievement and purpose is a genuine motivator, not just pay

• They communicate identity to external stakeholders

  • A clear mission and set of values can help customers and investors understand what a business stands for, helping it stand out from competitors

Example

Patagonia's mission is "We're in business to save our home planet".

This prompted its 'Worn Wear' scheme, encouraging customers to repair rather than replace clothing and reinforced its identity as an environmentally responsible brand

• They build trust and reputation

  • Values that are consistently upheld, rather than just stated, can strengthen a business's reputation and support charging premium prices

• A mission or set of values that is not genuinely reflected in business behaviour can damage trust and reputation

  • Stakeholders may see it as insincere rather than a real guide to decision-making

The importance of objectives

• Corporate objectives are the overall, business-wide goals set by senior management that guide the direction of every department within an organisation

The SMART framework

• Corporate objectives are often set using the SMART framework

• They can take several forms, and different businesses (or the same business at different points in time) may prioritise different ones

  • Profit

    • Maximising financial return for shareholders

  • Growth

    • Increasing sales, market share or the size of the business

  • Survival

    • A short-term priority during difficult trading conditions, prioritised over profit or growth

  • Market share

    • Increasing the proportion of total industry sales the business controls

  • Social or environmental objectives

    • Targets relating to sustainability, ethical sourcing or community impact, alongside financial goals

• Objectives change over time as circumstances change

  • For example a business may shift from a growth objective to a survival objective during a recession

Mission and corporate objectives

• The mission states why the business exists and who it serves today

• Corporate objectives translate that purpose into specific, measurable targets for the whole organisation

• Example

  • Tesco’s mission: To serve shoppers a little better every day

  • Corporate objective: Increase UK market share from 27% to 30% within two years

Corporate objectives and strategy

• Corporate strategy outlines how the firm will achieve those targets, allocating resources and choosing markets or products

• It balances risks, costs and expected benefits over the medium to long term

• Example

  • To hit its 30% market share objective, Tesco’s strategy might include

    1. Build a faster online-ordering system and 100 new convenience stores

    2. Guarantee the lowest prices on key grocery staples

Strategy and functional objectives

• Each department sets its own objectives to deliver the strategy

• Those objectives are shorter-term and more detailed than corporate goals

• Example:

  • Marketing: Sign up 3 million new Clubcard members in 12 months

  • Operations: Open 100 new Tesco Express sites by 2026

  • Finance: Reduce supply-chain costs by 5% by negotiating bulk-buy discounts

Functional objectives

• Managers and supervisors decide daily or weekly actions that drive functional objectives forward

• These decisions are highly specific and easily adjusted

• Example:

  • Marketing team: Launch a two-week 'double points' Clubcard promotion, starting on Monday

  • Operations team: Schedule extra delivery vans in high-demand zones every Friday

  • Finance team: Approve a one-off advance payment to a key supplier for a 2% discount

The value of setting objectives:

• They provide clear, measurable targets

  • Turning a broad mission into a specific figure, such as a percentage growth in revenue, gives managers something concrete to plan and work towards

• They allow performance to be assessed

  • Objectives create a benchmark against which actual results can be measured, making it possible to judge whether a strategy is succeeding

Example

Greggs' publicly stated objective to open around 3,500 UK stores gives investors and analysts a clear measure against which to judge the success of its expansion strategy each year

• They motivate employees and managers

  • A clear, achievable target can encourage staff to focus their effort, particularly when linked to performance-related pay or bonus schemes

• They help co-ordinate activity across functional areas

  • When marketing, finance, HR and operations are all working towards the same stated objective, decisions in each area are more likely to support one another rather than conflict