Hi all.

The first few lessons on corporate strategy and corporate social

responsibility for business studies unit 4 are given below. More notes
and sample questions based on the pre seen case material will be
published in due course.
Regds..
Mr Sayeedh Ghouse
Lecturer
Inception Academy

Corporate Objectives
Businesses must have a purpose or direction. Theyre unlikely to
survive if either of the above are not met. To do so, they will have
to;
Decide upon the aims of the business
Communicate their aims in a mission statement
Set corporate objectives

Aims
Aims or objectives can be defined as the long term goals or
visions of a business from which objectives can be set. Theyre
generally ambiguous and vague in nature (not clear). For
example, our aim is to become the best manufacturer of iPods in
Asia.

Mission Statement
These are the statements that outline the overall reasons for a
firms existence. A mission statement is likely to include;
Purpose - The reasons why the company exists
Values - What the company believes in. Eg:- Protection to
the environment.
Standards of behavior Standards set by managers and
especially how employees are treated.
Strategy Medium to long term plans design to achieve
aims and objectives.
The mission statement must be capable of inspiring those who
hear it or see it. In other words, it should be memorable in nature.

Example: Mission statement of Walt Disney Our aim is to

provide the finest in entertainment to people of all ages
everywhere.
However, some organizations do not have a mission statement at
all. For example, Marks & Spencer believes that their mission
statement cannot be summarized in a single paragraph or
sentence.

Advantages a of mission statement

1. All stakeholders will know the central aim of the business.
2. Provides a sense of direction to the firm.
3. This will motivate employees who will work towards
achieving this mission statement.
4. Helps managers to plan, co ordinate, control and organize
activities.

Limitations of a mission statement

1. Most of them are vague and say little about them for
business. For example, they never mention the word profit.
2. It is impossible to disagree with most of them.
3. Theyre simply used for PR purposes to shoe the company in
a positive light.
An effective mission statement must be continuously reviewed,
analyzed, monitored and changed according to the requirement
(internal or external).

Corporate objectives
These are company - wide goals that needs to be achieved in
order to keep the business on track to achieve its arms.
Objectives must confirm to the SMART criteria. (MBO introduced

by Peter Drucker, tried and tested by Jack Welch the CEO of

General Electrics for over 20 years. Also known as the bottoms
up approach).
S (Specific) Sets out clearly what need to be achieved.
Example: - Increase in sales
M (Measurable) To assess success or failure.
Example: - Increase sales by 25%
A (Achievable) Unachievable objectives will be ignored.
R (Realistic) Are the resources available?
Example: - Are the skills available
T (Time) Setting a deadline.
Example: - Within 2 years.

Objectives are usually set for

Survival
During early stages
PLCs for increased
When trading is difficult
share prices and
Threat of takeover
shareholder value

Growth

Profit

Big is beautiful
Economies of scale
Market dominance

Other objectives of a business include;

To operate in the interest of consumers. Example: - Public
Sector.
Revenue maximization. Example: - charity shops.
To operate in a socially responsible manner.

Objectives and conflicts amongst stakeholders

Shareholders
When dealing with shareholders, there are 2 types of approaches;
1. Shareholder Approach
Where managers give priority for shareholders; meaning
maximizing shareholder value.
2. Stakeholder Approach
This is involves treating all stakeholders equally. In theory,
this leads to long term benefits. Many managers adopt this
approach whereby they have a responsibility to all
stakeholders.
The conflicts arise when managers retain profits for future
expansion purposes which thereby reduce shareholder value.
Employees
Always want maximum wages and benefits along with job security
and job satisfaction. This reduces company profitability which
conflicts with managers objectives of increased profits.
Customers
Want value for money which can be done by investing in R&D but,
this may compromise on returns for shareholders.

Government
Wants firms to employ more people (to reduce unemployment)
and tax the profit made by firms whereas profit is the main
objective of any private sector firm.
Pressure groups-Will push the business to make more ethical
decisions such as reducing their carbon footprint but, this can
prove costly.

Corporate Social Responsibility (CSR)

CSR is the responsibility a business has towards its stakeholders.
CSR is about;

Conducting a business in an ethical manner.

Balancing the interests between different stakeholders.
Acting upon issues before legally required doing so.
The business is good citizen.

CSR is important for different groups of stakeholders such as;

1. Customers
Will be concerned about;
Product sourcing
Value for money
Informed choices
After sale services

2. Society
Will be concerned about;
Waste
Carbon emission
Bio diversity

 Energy efficiency

3. The local community

Will be concerned about;
Job rotation
Constitution
Health and safety

4. Employees
Will be concerned about;
Health and Safety
Equality
Work life balance
Security
Training

Advantages of CSR:1) A positive CSR will enhance reputation of a firm thereby

making it easier to recruit and retain staff more easily.
2) Positive CSR and its benefits can be reaped in the future
whereby such firms find it relatively easier to launch new
products in markets they previously did not compete in. For
example, Johnsons & Johnsons including milk powder for
mothers found it much easier to penetrate these markets as
they have gained international acceptance and recognition
form the milk powder said to infants.
3) The implications of CSR in the lime light f ethical behavior
will mean that the consumers of these products will be loyal
to such firms products since they feel a contribution is made

by them towards the upliftment of society when making such

purchases. As a result, these firms will be able to obtain a
competitive advantage against those firms that resist
portraying such an image. This can be done by charging a
higher price.
4) Higher sales and profits resulting from CSR activities will lead
to greater shareholder value and also make it easier for the
firm to raise finance through the issue of new shares or
debentures.
5) CSR intercepts the possibility of a tarnished reputation as a
result of poor quality or faulty products. For example, Toyota
Prius and its faulty brakes.
6) Government intervention may be minimized to those firms
engaged in CSR activities.

Limitations of CSR:1) CSR activities are sometimes criticized to be short lived

during an economic crisis or periods of poor performance
due to its high cost of implementation.
2) CSR is generally criticized to be a source of public relation
activity as firms want people to perceive a positive image
through the media.
3) The benefits of CSR are generally generated over a longer
period of time compared the date of commencement.
4) CSR is considered to be a long term commitment and
essentially requires a commitment from all levels within the
organization to succeed. As a result, over investment may
distract the company from its core competencies.

5) Sometimes CSR is seen as an activity done by the firms to

prvent invention by the government.
6) A limitation of CSR is that in a modern context, this policy I
practiced by many firms and therefore the costs of
implementation may overweigh the benefits.
Mr Sayeedh Ghouse
Lecturer
Inception Academy