Chapter 3 - purpose of a business Flashcards
(19 cards)
What model is used for Mission Statement
Ashbridge College model
What should a successful mission statement include:
Purpose
Strategy
Policies
Values
What does purpose mean?
Why does the organisation exist and what does it aim to achieve for its stakeholders?
What is strategy
What resources, competencies or generic strategy give the company a competitive advantage?
What is Policies
What standards and behavioural patterns are adopted
within the organisation?
Values
What beliefs do the managers and employees share?
Advantages claimed for mission statements
Help resolve stakeholder conflict.
Set the direction of the organisation and so help formulate strategy.
Help communicate the values and direction of the organisation to
stakeholders.
Criticism of mission statement
Often full of meaningless terms like ‘the best’, which give staff little
idea of what to aim at
Often ignored by managers
Often considered to be just a public relations exercise.
what is the rational approach to strategy
the mission statement is the start point of strategy formulation.
What are the stages of strategy formation
Mission (general direction)
Objectives (Specific goals)
Strategies (Long term plans to achieve objectives)
Action plans and budget (Short term plans to implement strat)
Organisational objectives should be…
SMART
Profit making entities
Primary and secondary objectives?
1st:
Maximise shareholder wealth
2nd:
Customer satisfaction
Social responsibility
Innovation
Meaningful employment
NFP Primary and secondary entities
1st:
Maximise the benefit to
target stakeholder
2nd:
Investing in staff
Minimal impact on the local
environment
Economy, efficiency,
effectiveness
What are the issues with the objectives with NFP organisations.
1) Often have multiple objectives to consider
2) Difficult measuring these objectives as success is typically non-financial
3) Stakeholder conflicts may be more difficult to resolve as NFPs typically have a wide range on influential stakeholders
4) Financial constraints may limit the amount that they can achieve. Often budgets or limited funds to work with.
what is an issue with stakeholders
Stakeholder conflict
What model is used for stakeholder mapping
Mendelows power-interest stakeholder matrix
what is the matrix used for
used to analyse and to identify an appropriate response
what are the four types of stakeholders
Low: Low Minimal effort can be directed
Low P: High I Keep informed
High I : Low P Keep satisfied
High : High Key players need participation
Once determined how influential they are, the business can consider how to treat them
what is an objective for business regarding stakeholders and the matrix?
Stopping stakeholders moving up the matrix and getting more influence.
