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Mission Statements and Vision Statements

● Mission statement:​ mission statement is a short sentence or paragraph used by
a company to explain its purpose.
● Vision statement:​ ​An aspirational description of what an organization would like
to achieve or accomplish in the mid-term or long-term future. It is intended to
serves as a clear guide for choosing current and future courses of action.
● An effective mission statement should answer these 3 questions:
1. What do we do?
2. For whom do we do it?
3. What is the benefit?

What is the link between vision and mission statements

● Without the direction and focus brought to an organization by vision and mission
statements, planning new strategies will be difficult.
● Vision and mission statements give the organization a sense of purpose and can
prevent the it from going through tough times or heading in the wrong direction.

Effectiveness of These Statements

Benefits
● They quickly inform groups outside the business what central aim and vision of
the company is.
● They help motivate employees because if the mission statement is well written
then the employees will be enforced to apply these positive qualities.
● They help establish to other business groups what the business is all about
Limitations
● Too vague and general which they end up saying too little about the business
plan or its future plans.
● Based on a public relations of the stakeholder groups to feel good about the
organization.
● Virtually impossible to analyze or disagree with
● Lacks detail so it is possible for two companies to have similar mission
statements.

Corporate Aims
● Corporate aim:​ A well defined and realistic goal set by a company that often
influences its internal strategic decisions. Most corporate objective targets used
 by a business will specify the time frame anticipated for their achievement and
how the company's success in doing so is to be assessed.
● A typical corporate aim is “to increase shareholder returns each year through
business expansion.
● This tells us that the company aims to give shareholders maximum returns on
their investment by expanding their business.
● Other corporate aims focus on “consumer based goals” which is meeting the
consumers needs

Benefits of establishing a corporate aim

● Operational objectives:​ ​An operational objective is a measurable short-term
goal that assists a company in obtaining its strategic or long-term goal.
Operational objectives are usually evaluated using performance measures that
help a company determine whether it is on track or off course.
● It can help develop a sense of purpose or direction for the whole organization if
they clearly communicated to the workforce
● They allow an assessment to be made, at a later date of how successful the
business has been in attaining its goals
● Provide the framework within the strategies that the business can be drawn up

Operational Objectives Should be “SMART”

S​pecific ​- objectives should focus on what the business does and should apply directly
to that business.
M​easurable​ - objectives that have a quantitative value to prove to be more efficient
targets for directors and staff to work towards.
A​chievable ​- objectives must be achievable. Setting objectives that are almost
impossible to achieve in a given time will be pointless. They will demotivate the staff
who have tasks to reach these targets.
R​ealistic and relevant:​ objectives should be relevant when compared with the resources
of the company and should be expressed in terms relevant to the people who carry
them out.
T​ime specific:​ a time limit should be set when an objective is established.

Interlinking Aims, Objectives and Strategies

● Corporate aims are broken down into operational objectives for separate
divisions.
● Operational objectives are set by senior management to ensure:
 1. Coordination between all divisions (if they do not work together then the focus of
the organization will appear confused to outsiders and there will be
disagreements between departments)
2. Consistency with strategic corporate objectives
3. Adequate resources are provided to allow for the successful achievement of the
objectives.

Relationships Between Aims, Strategy and Tactics

● Without a clear objective a manager will be unable to make important strategic
decisions.
● For any corporate aim to be successfully achieved, there has to be an
appropriate strategy in order to ensure that resources are correctly directed to its
final goal.
● Aims can change over time.
● A change in objective requires a change of a plan too so if the plan is poor then
the strategy will lead to failure when attempting to reach the target.

Strategy and Tactics - Key Differences

Strategic decisions Tactical decisions

Long term Short term

Difficult to reverse once made - Reversible - but there are still costs
departments will have committed involved
resources to do it

Taken by directors or senior management Taken by less senior management with

delegated authority

Cross functional - will involve all major Impact of tactical decisions is often only
departments of the business on one department

Strategy: ​An action that managers take to attain one or more of the organization’s
goals. Strategy deals with long term developments rather than routine operations.

Tactic:​ A short term decision aimed at resolving a particular problem. Tactics can
change based on how successful a company’s strategy is.
Profit Maximization
● Profits are important for rewarding investors in a business and for financing
further growth .
● Profits are necessary to persuade business owners and entrepreneurs to take
risks.
● Profit maximization means producing at the level of output where the greatest
positive difference between total revenue costs is achieved.

Limitations to profit maximization

1. Risk​ (​Pursuing a profit maximization strategy comes with the obvious risk that
the company may be so entrenched in the singular strategy meant to maximize
its profits that it loses everything if the market takes a sudden turn.)
2. Expectation and Goodwill​ (​If a company pursues a profit maximization strategy,
it creates an environment where price is a premium and cutting costs is a primary
goal. This, in turn, creates a perception of the company that could lead to a loss
of goodwill with customers and suppliers)

Advantages of Profit Maximization

1. Cash Flow​ (​For all its drawbacks, profit maximization carries the big advantage
of creating cash flow. When maximizing profit is the primary consideration,
investments, reinvestments and expansions are typically tabled. The company
simply makes do on what it has. This can create a more cost-efficient
environment. In the meantime, the profits keep building, producing a healthy
bottom line and increasing the firm’s amount of available cash. Sometimes profit
maximization is used entirely to create an influx of cash so the firm can reduce its
debt or save up for expansion.)
2. Financing and Investors ​(​The goal of a company is to create profits. It has to
profit from its business to stay in business. Moreover, investors and financiers in
the company may require a certain level of profits to secure funds for expansion.
Further, a company has to perform well for its shareholders; they expect a return
on their investments. As such, maximizing that profit is always a consideration to
some extent.)

What is profit satisficing

● It means when you achieve enough profit to keep the owners happy but not
aiming to work so much to make as much profit possible. This is often the
 objective of owners of small businesses who wish to live comfortably but do not
want to work for long hours in order to earn more profit.

Growth
● Businesses that do not try and grow will face a lot of competition and will lose
their appeal to new investors.
● Business growth based on growth have limitations:
1. Fast expansion can lead to cash flow problems
2. Sales growth might be achieved at the expense of lower profit margins.
3. Larger businesses can experience diseconomies of scale
4. Using profits to finance growth (retained profits can lead in a loss of focus and
direction for the whole organization)

Increase Market Share

● Increasing market share indicates that the marketing mix of the business is
providing to be more successful than of its competitors.
● Benefits that result from being a brand leader with the highest market share
include:
1. Retailers will be keen to stock and promote the best selling brand
2. Profit margins offered to retailers may be lower than for competing brands as the
shops are keen to stock it.
3. Effective promotional campaigns are often based on ‘buy our product with
confidence’

Ethical Objectives
Ethics:​ Moral principles that guide the way a business behaves. Ethics tell a person
what is morally correct or incorrect in a given situation.

Ethical code of conduct: ​A guide of principles designed to help professionals conduct

business honestly and with integrity. A code of ethics document may outline the mission
and values of the business or organization, how professionals are supposed to
approach problems, the ethical principles based on the organization's core values and
the standards to which the professional is held.

Corporate Social responsibility

● Stakeholders:​ a party that has an interest in a company, and can either affect or
be affected by the business. The primary stakeholders in a typical corporation
are its ​investors​, employees and customers.
 ● Corporate social responsibility​: ​A broad term used to describe a company's
efforts to improve society in some way. These efforts can range from donating
money to nonprofits to implementing environmentally-friendly policies in the
workplace.

Benefits and Drawbacks for businesses of Adopting CSR Policies

Benefits Drawbacks

● The image of the business and its ● Short run costs could increase like
products can be improved with paying workers above wage levels
green or socially responsible ● Shareholders may hesitate to
approach. This could be a major accept lower short run profits
competitive advantage in which it ● Loss of cost and price
would attract new customers and competitiveness if rival businesses
loyalty existing customers. do not accept social
● Attracting the best motivated responsibilities and have lower
employees may be easier as costs as a result.
workers will prefer to work for and ● Consumers may have to pay
be associated with a socially aware higher prices for products made in
business. a socially responsible manner
● Bad publicity and pressure group ● There could be a social backlash in
activity resulting from socially which a business claims to be
irresponsible behaviour should not responsible even though it is the
come up. complete opposite.
● Higher profitability should come as
a result.

Measuring CSR - Social Audits

● Social audit: ​An independent report on the impact a business has on society.
They also assess how effectively its behaviour matches up to its ethical
objectives.
● Social audits include:
1. Health and safety records (number of accidents)
2. Contributions to local community events and charities
3. Employee benefit schemes
● Social audits also include annual targets to be reached in order to improve the
firm's level of social responsibility.
Benefits and Limitations on Social Audits
Benefits Limitations

● Identifies what social ● If the social audits are not

responsibilities the business is independently checked then it will
meeting and what still needs to be be taken seriously by stakeholders
achieved. since it is a procedure that must be
● Sets targets for improvement in taken
social performance by comparing ● Time and money must be devoted
social audits with the best to producing a detailed social audit
performing firms in the industry ● Many consumers may only be
● Gives direction to the action plan a interested in cheap goods and not
business still need to put into effect whether the business they buy
to achieve its social objectives from are socially responsible
● Improves a company’s public ● A social audit does not prove that a
image and this can be used as a business is being socially
marketing tool to increase sales. responsible

Issues Relating to Corporate Objectives

● They must be based on the corporate aim and should link with it
● They should be achievable and measurable if they are to motivate employees
● They need to be communicated to employees and investors in the business.
● They should indicate a time scale for their achievements (SMART)

Conflicts Between Corporate Objectives:

● Growth vs. profit
● Short term vs. long term
● Stakeholder conflicts

Factors That Determine Corporate Objectives

● Corporate culture (code of behaviour and attitudes that influence the decision
making style of the managers and other employees of the business.
● Size and legal form of the business
● Public sector or private sector businesses
● Well established businesses

Ansoff’s Matrix

● Ansoff’s matrix:​ ​is another marketing planning tool that helps a business
determine its product and market growth strategy.​ It ​suggests that a business’
 attempts to grow depend on whether it markets new or existing products in new
or existing markets.
● Ansoff came up with the idea that a long term businesses success was
dependent on establishing business strategies and planning for their introduction.
● The matrix represents the different options open to a marketing manager when
considering new opportunities for sales growth.
● The 2 main variables in a strategic marketing decision are:
1. The market (in which the firm is going to operate)
2. The product (intended for sale)

In terms of market, managers have two options:

1. To remain in the existing market
2. To enter new ones

In terms of the product, the two options are:

1. Selling existing products
2. Developing new ones

Market penetration
- Market penetration:​ the name given to a growth strategy where the business
focuses on selling existing products into existing markets. It is ​is one of the four
alternative growth strategies in the Ansoff Matrix.

Market penetration seeks to achieve four main objectives:

● Maintain or increase the market share of current products – this can be achieved
by a combination of competitive pricing strategies, advertising, sales promotion
and perhaps more resources dedicated to personal selling
● Secure dominance of growth markets
● Restructure a mature market by driving out competitors; this would require a
much more aggressive promotional campaign, supported by a pricing strategy
designed to make the market unattractive for competitors
● Increase usage by existing customers – for example by introducing loyalty
schemes
A market penetration marketing strategy is very much about “business as usual”. The
business is focusing on markets and products it knows well. It is likely to have good
information on competitors and on customer needs. It is unlikely, therefore, that this
strategy will require much investment in new market research.
Product Development
● Product development:​ he name given to a growth strategy where a business
aims to introduce new products into existing markets. This strategy may require
the development of new competencies and requires the business to develop
modified products which can appeal to existing markets.
● A strategy of product development is particularly suitable for a business where
the product needs to be differentiated in order to remain competitive. A
successful product development strategy places the marketing emphasis on:
● Research & development and innovation
● Detailed insights into customer needs (and how they change)
● Being first to market

Market Development
● Market development​: the name given to a growth strategy where the business
seeks to sell its existing products into new markets. ​A market development
strategy targets non-buying customers in currently targeted segments.
● There are many possible ways of approaching this strategy, including:
● New geographical markets; for example exporting the product to a new country
● New product dimensions or packaging: for example
● New distribution channels (e.g. moving from selling via retail to selling using
e-commerce and mail order)
● Different pricing policies to attract different customers or create new market
segments

Diversification
● Diversification: ​the name given to the growth strategy where a business markets
new products in new markets.This is an inherently more risk strategy because
the business is moving into markets in which it has little or no experience.
● For a business to adopt a diversification strategy, therefore, it must have a clear
idea about what it expects to gain from the strategy and an honest assessment of
the risks. However, for the right balance between risk and reward, a marketing
strategy of diversification can be highly rewarding.

Evaluation of Ansoff’s Matrix

● The matrix allows managers to analyze the degree of risk associated with each
strategy.
● Managers can then apply the decision making techniques to assess the costs,
potential gains and risks that have to do with all the options.