3.3.1.

– Business
objectives and strategy
By Casado
3.3.1.1 – a) Development of corporate
objectives from mission
Corporate statement/corporate aims

objectives
and b) Critical appraisal of mission
strategy statements
 a) Development of corporate objectives from
mission statement/corporate aims
• Business aims  these are less specific
than business objectives and are usually
called a vision – these are usually
communicated through a mission statement
• Mission statements  states the business’
main purpose (goals and values)
a) Where it operates
b) Key commercial objectives
c) How it values its stakeholders
d) What its ethics involve
What are the different elements of a mission statement?
• Purpose  why the business exists (what it does, for whom and why)
• Values  the values that they invest in (integrity, sustainability, innovation and
quality)
• Standards and behaviours  may communicate its commitment to high standard
• Strategy  how the business will try to achieve its goals
There are 2 reasons why a business would create and share its mission statement
1. Commitment to its customers – expresses a promise to them
2. It brings a company’s workforce together as their employees follow a mission
statement that they believe in
Development of corporate objectives
Set by senior manager and directors of the company and SMART:
• Specific – aims they want to achieve
• Measurable – demonstrate whether objectives have been achieved
(financial or quantifiable)
• Achievable – makes sure that the business can achieve its target
• Realistic – ensures that the objective can be met given the current
conditions
• Time specific – gives the stated time frame required to achieve the
objectives
Departmental and functional
objectives
Once general objectives have been established,
more specific corporate objectives explain
exactly what the business does. These help to
inform even more departmental and functional
objectives (the objectives of a department
within a business). These refer to the corporate
objectives and mission statement.
These set daily goals and make sure that the
activities are consistent.
Starbucks
Organizational
Structure
• Starbucks has a matrix organizational structure.
This structure is made of the following:
1. Functional hierarchy (business function)
2. Geographic divisions (areas or regions of
operations)
3. Product-based divisions (product type, such
as food and merchandise)
4. Work teams (groups for tasks and objectives
throughout the business organization)
The difference between large
and small businesses
Small businesses:
• Ensure the company breaks even
• Improve liquidity
• Increase sales
• Increase pre-tax profits
• Hire new staff
By contrast, large businesses tend to have
mostly financial objectives as they have
many stakeholders to satisfy
 b) Critical appraisal of mission statement and
corporate aims
The mission statements must be constantly assessed to ensure they have continued
relevance
Usually, organizations may have a mission statement that is appealing to its customers.
Yet, if it is not believed by employees, then customers may soon lose faith in the
business.
A critical reassessment should include:
• What is the purpose of the mission statement
• What audience is it for?
• How does the business strategy fit in?
• Are the aims realistic and achievable?
3.3.1.2 –
Theories of
corporate
strategy
 a) Development of corporate strategy:
- Ansoff’s matrix
- Porter’s Strategic matrix
Developing an effective corporate strategy requires a
significant amount of time and research

Ansoff’s Matrix – a strategic tool used to analyze and plan

a company’s business growth strategies.
• Market Penetration - achieve growth in existing
markets with existing products
It must believe that the product is a successful product so
that it can generate more profit from it
• Product Development - marketing new or modified
products in existing markets
• Market development - the marketing of existing
products in new markets
• Diversification - developing new products in new
markets
Porter’s Strategic Matrix
Used to to identify the sources of competitive advantage that a business might achieve in a market.
• Cost leadership - striving to be the lowest-cost provider in the market.
2 ways in which businesses can operate as the lowest cost provider:
1. Increasing profits, while still charging market level prices
2. Increasing market share, while charging lower prices (these are still making a profit as costs are
reduced)
• Differentiation – a way of differentiating itself from the competition
This therefore comes with advantages such as being able to charge premium prices if their customers
value their USP
• Focus – targeting a narrow range of customers
1. Cost focus – emphasising cost minimisation
2. Differentiation focus – following different strategies within a focused market
b) Aim of portfolio analysis
• Portfolio analysis is a way of categorizing all the
products of a firm to decide where each one fits within
the strategic plan
Involves 2 steps:
1. Give full and detailed overview of all of the products
in the current portfolio
2. Look at the performance of each of these products
and services
• Current and projected sales
• Current and projected costs
• Competitor activity and future competition
• Risks that may affect performance
c) Effect of strategic and tactical decisions
• Strategies are a long-term direction that a business will take
• Tactics are short-term responses
Human resources:
• Strategy – long lasting effect, may feel the impact of such measures indefinitely
• Tactic – short period of time – may not affect all employees
Physical resources:
• Strategy – permanently outsource its transport and delivery operation, it will need to sell off most of its
delivery vehicles. This means only a small proportion of physical resources will be affected.
• Tactic – may not be so dramatic.
Financial resources:
• Strategy - Strategic decisions can have a significant and long-term impact
• Tactic - tactical decision may only have a short-term effect.
3.3.1.3 – SWOT analysis
a) SWOT analysis
• Internal considerations
Internal audit – analysis of the business itself and
how it operates (might be conducted
by outside management consultants.)
1. Including their products and their costs,
quality and development
2. finance, including profit, assets and cash flow
3. production, including capacity, quality,
efficiency and stock management
4. Internal organization
5. Human resources
• External considerations - is an analysis of the
environment in which the business operates.
This analysis may include analysing:
1. the market
2. the competition
3. the political, economic, social, technological,
legal and environmental issues relevant to
the business.
 What is SWOT
analysis?
Used by managers before the
strategic plan
• Strengths and Weaknesses
should be identified in the
internal audit
• Opportunities and Threats
should be identified in the
external audit
Strengths Weaknesses
1. Strong coffee and coffeehouse brand 1. Pricing strategy for high price points
image. 2. Generalized standards for most products
2. Effective capabilities for managing a 3. Imitability of products, especially
global supply chain of coffee and related beverages
materials.
3. Moderate diversification through various
subsidiaries and products, including
merchandise.

Opportunities: Threats:
1. Further expansion in developing markets. 1. Competition with low-cost coffee sellers
2. Higher business diversification to include 2. Imitation of name, design, or recipes
operations related to food, beverages, and 3. Independent coffeehouse movements
merchandise.
3. Stronger market position through
additional partnerships or alliances.
3.3.1.4 – Impact of
external influences
PESTLE
Porter’s Five Forces
Competitive Large number of coffeehouses and food service firms (strong force)
rivalry:
Moderate variety of businesses (moderate force)
Low switching costs between coffeehouses (strong force)
Bargaining Low switching costs between coffee shops (strong force)
power of
High availability of substitute foods and beverages (strong force)
customer or
buyers Small size of individual buyers (weak force)
Supplier Power Moderate size of individual suppliers (moderate force)
Limited variety of suppliers (moderate force)
Supply shortages (strong force)
Threat of High availability of substitute foods and beverages (strong force)
Substitution
Low switching costs between coffeehouses and substitutes (strong force)

High affordability of substitute products (strong force)

Threat of Moderate cost of doing business (moderate force)

New Entry
Moderate supply chain costs (moderate force)

High cost of brand development (weak force)