- 20 Marks
SCS – L3 – Q4 Strategy, stakeholders and mission
Question
(a) A mission statement describes an organization’s basic purpose and what it is trying to achieve. It can play an important role in the strategic planning process. There is no standardized format for mission statements. However, there are common elements included in most mission statements. Outline any FIVE (5) of these elements.
(b) Strategy evaluation is as important as strategy formulation. One of the tools used for evaluation is a resource audit. Explain FIVE (5) resources that might be examined in a resource audit.
(c) Reporting on corporate governance is one way of ensuring transparency. Based on recent corporate governance concerns, explain FIVE (5) issues that should be contained in corporate governance reports.
Answer
(a) Common elements in mission statements
(1) Stating the purpose of the organization
(2) Stating the business areas in which the organization intends to operate
(3) Providing a general statement of the organization’s culture
(4) Acting as a guide to develop the direction of the entity’s strategy and its goals/objectives
(5) Customers. Who are the enterprise’s customers?
Note: Any student who approaches this question from the Ash ridge College model perspective should earn the full marks. Find below
(1) Purpose: Why does the company exist? Who does it exist for?
(2) Values: are the beliefs and moral principles that underlie the organization’s culture.
(3) Strategy: provides the commercial logic for the company (the nature of the organizations business) and so addresses the following questions. “What’s our business? Or what should it be?” What are elements of sustainable competitive advantage?
(4) Policies and standards of behavior provides guidance on how the organization’s business should be conducted.
(b) Elements in the Ms. Model
Resource audits identify human, financial and material resources and how they are deployed. A resource audit is a review of all aspects of the resources the organization uses. The Ms. Model categorizes the factors as follows:
| Resource | Example |
|---|---|
| Machinery | Age. Condition. Utilization rate. Value. Replacement cost. |
| Make-up | Culture and structure. Patents. Goodwill. Brands. |
| Management | Size. Skills. Loyalty. Career progression. Structure. |
| Management information | Ability to generate and disseminate ideas. Innovation. Information systems. |
| Markets | Products and customers. Specialized or general, national, international. |
(c) Issues contained in corporate governance reports.
All corporate governance reports (included AFRI State’s Code of Best Practices in Corporate Governance) state that board directors should explain their responsibility for preparing accounts. They should report that the business is a going concern, with supporting assumptions and qualifications as necessary.
In addition, further statements required include:
(1) Information about the board of directors: the composition of the board in the year, the role and effectiveness of the board, information about the independence of the non-executives, frequency of, and attendance at, board meetings, how the board’s performance has been evaluated. For example, the Southern State Governance Report suggests a charter of responsibilities should be disclosed.
(2) Brief report on the remuneration, audit and nomination committees covering terms of reference, composition and frequency of meetings.
(3) Information about relations with auditors, including reasons for change and steps taken to ensure auditor objectivity and independence when non-audit services have been provided (AFRI State’s code requires that audit and non-audit fees are disclosed).
(4) A statement that the directors have reviewed the effectiveness of internal controls, including risk management. Also, sufficient disclosures should be given for shareholders to understand the main features of the risk management and internal control processes. Board should also give details of, or at least confirm, any action taken to remedy significant failings or weaknesses. (This is required by AFRI State’s Code).
(5) A statement on relations and dialogue with shareholders.
- Topic: stakeholders and mission, Strategy
- Uploader: Salamat Hamid