Mission, Aims, Objectives, Strategy & Tactics (CIE A Level Business)

• Objectives provide a sense of direction and focus to those running and making decisions within a business
  • Objectives act as targets
    • Decisions that contribute to achieving these targets can be pursued, whilst those that make little contribution can be discarded
    • Poor decisions that fail to achieve objectives can be avoided in future and may inform management training
      
      
  • Objectives allow success criteria to be determined and outcomes to be measured
    • Suitable strategies that have the greatest chances of success can be implemented
    • Inappropriate or risky strategies may be avoided

• A business's aim is its long-term direction, which is usually broadly stated and often aspirational
  • It is usually set by senior executives
  • E.g. To be the most successful independent coffee shop chain in the country
    
    
• Some businesses express their aim in a mission statement
  • Mission statements usually include words or attractive phrases that appeal to key stakeholders
  • E.g. Bring the World of Coffee to Every Neighbourhood
    
    
• Business objectives are derived from the aim and mission
  • Objectives state, specifically and in measurable terms, what the business wants to achieve
  • E.g. Increase sales of coffee by 25% in 2024
    
    • Corporate objectives are whole-business targets
    • Functional objectives are derived from corporate objectives and describe the targets of business departments or functional areas
      
      
• The link between a business's aim, mission and objectives can be illustrated as a hierarchy
  
  

Diagram: The Hierarchy of Aims, Mission & Objectives

The business aim informs its mission, corporate objectives and functional objectives

• The most effective objectives are clearly stated and allow progress to be assessed
• These types of objectives can be summarised using the acronym SMART
   
• • Specific: what exactly the business is measuring, such as the value of sales or sales volume
  • Measurable: a quantifiable success measure, such as a percentage increase
  • Agreed; the objective is shared with workers and perhaps mutually agreed
  • Realistic: Ambitious, but capable of being achieved in normal circumstances
  • Time-bound: a date or time by which the objective should be achieved
    

Diagram: Example of a SMART Objective

This objective is specific, measurable and time-bound

• A business strategy is a long-term approach a business adopts to achieve its key objectives
  • E.g. A business pursuing an objective of growth may choose to adopt a strategy of diversification, targeting new customers with innovative products
    
    
• Tactics are the short-term actions a business takes as part of its overall strategy
  • E.g. A business pursuing a strategy of diversification may choose to adopt the tactic of conducting research in the target market before establishing sales outlets in a new location
    
    

Diagram: Objectives, Strategy & Tactics

Businesses decide on a suitable strategy to achieve their objectives, which informs short-term tactics

• Once tactics have been determined, managers can set targets and allocate budgets to teams and individuals
  
  
• Adhering to budgets and meeting these targets contribute to achieving the overall business objectives
  • Careful monitoring and adjustment, taking account of the external environment, is crucial
    • Budgets may need to be increased or more tightly controlled
    • If targets change, their impact on the likelihood of achieving objectives will need to be considered
    • Further resources may be required to meet deadlines or achieve budgetary targets

• Businesses operate in a dynamic environment, which may require them to pivot between different objectives
  

• These changes are often necessary to ensure that the business remains competitive, profitable, and compliant with regulations
   

Factors Which Cause Business Objectives to Change over Time

• Communicating the business objectives effectively, helps to ensure that employees are all working towards the same purposes
  • A range of other stakeholders benefit from this too
     
• Businesses share objectives with key stakeholders in a range of ways
   
• Public limited companies publish an annual report that shows a company's operations and financial performance in the preceding 12 months and details the objectives it expects to achieve over the next twelve months
  • Shareholders and potential investors can use this information to determine the likely return on investment they will receive
    
    
• Businesses often share their mission statement in marketing materials such as brochures or via their websites
  • Customers, employees and the local community are often interested in understanding the broad aim of a business in which they have an interest
    
    
• Objectives are also commonly shared with employees in business meetings and, particularly, during the appraisal process 
  • Individual targets can be set for workers that set out the contribution they will make to achieving objectives
  • Performance of staff can be measured and rewarded
  • Understanding their role in meeting objectives can be a powerful intrinsic motivator

• Many businesses consider the ethical impact of their decisions and are increasingly adopting an ethical approach in their decision making, including the setting of aims and objectives
  
  
• Some have adopted an ethical code of practice that provides a framework for responsible and fair strategic decision making and provides guidelines on staff behaviour