Mission, Objectives and Strategy
Every business needs direction. A mission defines the overall purpose, while objectives are specific goals set to achieve that mission. These objectives might focus on profit, growth, survival, cash flow, or social/ethical considerations depending on the business type.
Ownership structure dramatically impacts objectives. For-profit businesses will have different goals than non-profits, and sole traders have more freedom than limited companies with shareholders. This can lead to short-termism when shareholders demand quick returns, potentially sacrificing long-term benefits.
A business's internal environment (size, culture, resources, management views) and external environment PESTLEfactors−Political,Economic,Social,Technological,Legal,Environmental shape its objectives. For example, economic downturns might shift focus from growth to survival.
Remember this: Strategies are the medium to long-term plans that help achieve objectives, while tactics are the day-to-day activities that implement the strategy. The larger the business, the more formal and clearly defined these strategies tend to be.
Functional decision-making happens at the departmental level and is guided by strategic decisions. Strategic decisions are long-term and high-risk, determining the overall direction, while functional decisions are short-term and lower risk.