ACCA Applied Knowledge · Business and Technology · The purpose and types of business organisation
Delta Co's mission statement says: 'To be the most trusted provider of affordable home insurance in the region.' Which of the following is the most accurate description of the role of this statement?
A mission statement sets out the organisation's overall purpose and direction in broad terms, and specific measurable objectives are derived from it. It is neither a quantified short-term performance target nor a legal document setting shareholder rights.
- AIt sets out the organisation's overall purpose and direction, from which specific measurable objectives are then derivedCorrect
- BIt is a short-term, quantified target against which monthly manager performance is appraised
- CIt is a legal document defining the rights of shareholders against the directors
Explanation
A mission statement expresses an organisation's fundamental purpose and direction in broad terms. Specific, measurable objectives and targets are then derived from it. The statement is not a quantified short-term target and is not a legal document; the latter describes constitutional documents such as the articles.
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