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Strategic purpose is important because it defines what organizations stand for and intend to achieve in the short and long term. It is often expressed in terms of statements of purpose, vision, mission, or objectives. The statement of purpose highlights the organization’s core philosophies and goals that help its management to formulate policies and measure its success (Sadler 2003, pp. 117-120). In business organizations, a statement of purpose is very important because it forms the basis of the company’s brand and the promises that it plans to make to clients.
The vision statement plays an integral role in the management of organizations by stating what has to be achieved in the long-term. It defines what organizations intend to be in the future. In this respect, the vision statement helps organizations to develop the right strategies to achieve their long-term objectives. The mission statement highlights what the organization is doing to achieve its purpose or vision (Ranchhod & Marandi 2005, pp. 78-132). Thus, a mission statement is important because it acts as a guide that enables managers to align decisions and tasks to the company’s objectives. Undoubtedly, every organization must have objectives that are specific, measurable, achievable, realistic, and time to succeed in fulfilling the needs of its stakeholders.
The factors that influence the strategic purpose of an organization are stakeholder expectations, corporate governance structure, corporate social responsibility, and ethics. Stakeholders refer to the “persons, groups, or entities that depend on the organization to fulfill their needs or goals and on whom, in turn, the organization depends” (Jeffs 2008, p. 92). Stakeholders include customers, shareholders, local communities, and employees among others. Stakeholders use their powers to reward or punish to influence organizations’ strategic purpose. For instance, a retail store will only keep its customers if its strategic purpose allows it to provide the right goods at affordable prices.
Corporate governance refers to the structures and systems of control used by the board of directors to hold managers accountable. The role of corporate governance is to prevent mismanagement that might arise due to malpractices such as fraud, negligence, and conflict of interests (Yu & Rezaee 2012, pp. 171-188). In this respect, corporate governance influences the strategic purpose of an organization by ensuring that it addresses the needs of various stakeholders. For instance, the board of directors often formulates strategic plans that facilitate profitable operations while minimizing the environmental effects of their companies. In this case, the needs of shareholders, customers, and the community have been taken into account.
Corporate social responsibility (CSR) refers to an organization’s commitment to behave responsibly to minimize its adverse effects on the environment and the community in which it operates. This means that the organization’s strategic purpose must reflect the needs of the community that it operates in to ensure sustainability (Jeffs 2008, pp. 34-78). For instance, a manufacturing company can engage in recycling wastes and planting trees to minimize its effects on the environment and community.
+In this case, the company’s strategic purpose is to produce goods and services in an eco-friendly manner. Ethics influence strategic purpose by ensuring that the activities of the organization conform to stipulated codes of conduct. For instance, a company’s strategic purpose will emphasize the use of clean energy if air pollution is prohibited in its community.
References
Jeffs, C 2008, Strategic management, John Wiley and Sons, New York.
Ranchhod, A & Marandi, E 2005, Strategic marketing in practice, McGraw-Hill, New York.
Sadler, P 2003, Strategic management, Kogan Page, England.
Yu, C & Rezaee, Z 2012, “The role of corporate governance in convergence with IFRS: evidence from China”, International Journal of Accounting and Information Management, vol. 20. no. 2, pp. 171-188.
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