Summary Alevel Pearson Edexcel Business notes Unit 3

Corporate objectives
Mission statement:
 This is a short way for a business to express their main intent
 Sets out the purpose and primary objective of the business in the present
 Should be inspiring and memorable
 Looks towards the future of the business
Uses of mission statements
 Focus
o Can create high levels of focus and can give the business direction
 Identity
o Creates a sense of identity for the business and helps establish a position
in the market
 Profitability
o Creates profitability, as employees biome more motivated due to the fact
that the business has strong corporate values, that are reflected in the
mission statement
o Employees become aware that their job has a more significant purpose
beyond tasks or duties.
Limitations of mission statements
 Can be unrealistic and overoptimistic
 Can be a waste of management time and resources
 Can lead to conflicts and inconsistencies when not followed properly, leading to a
damaged brand image
 Can be ambiguous (Hard to understand)
 Can become obsolete as the business develops(mainly technologically, or socially, or a
merger/change of product)




Corporate objectives

This is what the business aims to achieve/specific goals of the business that are
realistic, achievable and measurable in time.


 Flows from the mission statement
 Usually set by senior management
 Aimed at satisfying shareholders
 Therefore these objectives are related to profits, and/or dividends

Department functional objectives
 Each department in a business sets their own objectives. (sales, marketing HR, finance,
etc)
 Should flow from the corporate objectives

S.M.A.R.T Objectives
 Specific

, o Must be a clear definition, often includes a number
 Measurable
 Achievable
 Realistic
 Time related
o Means setting a date for time or review
Corporate theories
Ansoff’s matrix

Existing Product / Service New Product / Service

Existing Market penetration ( low risk ). Product development ( moderate
market  Increasing sales in an existing risk ).
market  New product/service developed
 Sell more to the same for existing market
customers, encouraging them to  Research and development of
order more often through new products to sell to old
specified promotion. customers.
 Ie: Loyalty schemes, rewards  Ie: apple introducing the ipad
programs, cashback, etc. expanding from the iphone

New Market development ( Moderate Diversification ( High Risk ).
market risk ).  New product / service sold in a
 Existing product / service sold to new market.
a new market  Ie: an acquisition of a business
 IE: airline company expanding by another business, like coca
locations, or a retail business cola acquiring costa coffee.
opening up a new branch in a
foreign area.



Uses of Ansoff’s Matrix:
 Businesses can analyze the use of the matrix to plan out future expansions.
o This can be achieved by identifying all current products/services in the market,
evaluating performance and making informed business decisions based on them.
 Risk assessment
o Allows the business to understand the level of risk associated with each strategy.
o Ie: market penetration is less risky than diversification.
 Easy to understand
o Visualizes the format and is easy to interpret
o Improving the speed of decision making.
Limitations of Ansoff’s Matrix:
 Oversimplification
o It is very simple and only shows a part of the
picture.
o Large PLC’s will need much more analysis than just a simple matrix in order to
make key business decisions.
o Cannot put over reliance on the matrix