Influences on Mission, Objectives and Strategies
Political and Legal: Changes in government policy, trade restrictions, or new labor laws can force a business to redefine its objectives to ensure compliance and maintain market access.
Economic Factors: Interest rates, inflation, and exchange rates influence consumer purchasing power. During a recession, a company’s strategy often shifts from expansion to cost-cutting and efficiency.
Social and Environmental: Shifting demographics and increasing consumer concern for sustainability can lead to a total revision of a company's mission to include 'green' or 'ethical' pillars.
Technological Change: Rapid innovation can render existing strategies obsolete. Organizations must constantly update their objectives to integrate new technologies or risk being disrupted by more agile competitors.
Stakeholder Power vs. Interest: Different groups (shareholders, employees, customers, local communities) have varying levels of influence. Strategy is often a compromise between these competing interests.
Shareholder Primacy: In many public companies, the primary objective is maximizing shareholder value (dividends and share price), which can sometimes conflict with long-term social or environmental goals.
Employee Engagement: If the mission does not resonate with the workforce, productivity and retention may suffer. Modern strategies often incorporate employee well-being as a core objective to ensure long-term stability.
| Feature | Internal Influences | External Influences |
|---|---|---|
| Source | Originates within the organization (e.g., culture, finance). | Originates from the macro environment (e.g., PESTLE). |
| Control | High degree of management control and adjustment. | Low to zero control; requires adaptation and response. |
| Impact | Shapes the 'how' and 'who' of the strategy. | Shapes the 'where' and 'when' of the strategy. |
| Examples | Staff morale, R&D capabilities, leadership vision. | New legislation, competitor actions, economic cycles. |
Linkage is Key: When discussing an influence, always explain exactly how it changes a specific objective. For example, don't just say 'technology is an influence'; say 'advancements in AI may lead a firm to change its objective from manual processing to 90% automated efficiency.'
The 'So What?' Factor: For every external factor identified (like a tax increase), evaluate the strategic response. Does the firm raise prices (strategy) or accept lower profit margins (objective)?
Dynamic Nature: Remember that influences are not static. An effective answer discusses how a mission might need to be periodically reviewed to stay aligned with a changing environment.
Conflict Resolution: Be prepared to discuss what happens when influences conflict—such as when shareholders want high profits but the government introduces expensive environmental regulations.