Chapter 3: The purposes of a business

Question 1

What is a mission statement?

Answer 1

A written communication of an organisation’s core purpose, explaining why it exists and what it wishes to achieve for its stakeholders

Question 2

what are the elements of the Ashridge college model that suggest a successful mission statement?

Answer 2

Purpose - why the organisation exists and what it aims to achieve for it stakeholders
Strategy - resources, competencies and strategies give the business a competitive advantage
Policies - what standards and behavioural patterns are adopted within the organisation
Values - what beliefs do the managers and employees share

Question 3

What are the advantages of a mission statement

Answer 3

Helps resolve stakeholder conflict, guides strategic direction and communicates goals and values to stakeholders.

Question 4

what are the criticisms of a mission statement?

Answer 4

often vague, uses words like the ‘best’ which give staff little idea of where to aim, often ignored by management, sometimes just a PR exercise

Question 5

What does SMART stand for?

Answer 5

Specific - clear statement that is easy to understand
Measurable - to promote control and communication down the organisation
Achievable - it is pointless setting unattainable objectives
Relevant- to the stakeholders and the mission
Timed - setting a time period for the achievement

Question 6

What are the primary and secondary objective for a profit entity?

Answer 6

Primary - Maximise shareholder wealth
secondary - meaningful employment, innovation, customer satisfaction and social responsibility

Question 7

What are the primary and secondary objective for a not for profit entity?

Answer 7

Primary - To create stakeholder benefit
Secondary - little impact to local environment, investing in staff, economy, efficiency and effectiveness

Question 8

what are some issues with the objectives of NFP organizations?

Answer 8

NFPs have multiple objectives to consider which make it more difficult to achieve these objectives
Difficulty in measuring objectives because they are typically non financial
Stakeholder conflicts become more difficult to resolve because there a usually more than one stakeholders involved
Financial constraints may make it more difficult to achieve their objectives

Question 9

what is stake holder mapping used for ?

Answer 9

Stakeholders are anyone interested in the objectives of the businesses. organisations will need to prioritise them by formulating their objectives and missions via stakeholder mapping

Question 10

describe how Mendelow’s matrix can be used to perform stakeholder mapping?

Answer 10

Mendolow suggests the prioritisation of each type of stakeholder should be considered in relation to their level of power and interest. Stakeholders with low interest and low power can be dealt with minimal effort, stakeholders with high interest but low power should be kept informed, i.e. employees, stakeholders with high power but low interest should be kept satisfies and stakeholders with both high power and interest are key players that should be actively considered during decision making and strategic planning