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IAI Actuarial Core Principles · Business Management · Mission, business strategy, teamwork and time management

Sahyadri Life Ltd, a mid-sized Indian life insurer, is drafting a statement that says why the company exists, whom it serves and the values guiding its conduct. Which description best identifies this statement and its usual role in strategic planning?

The statement is a mission statement. It explains why the organisation exists, whom it serves and what values guide it, so it provides a broad framework against which strategic options are tested, unlike budgets, tactical plans or SWOT lists.

  1. AA mission statement, which sets out the organisation's purpose and gives a broad framework against which strategies are judgedCorrect
  2. BA budget, which allocates money across departments for the coming year
  3. CA SWOT analysis, which lists internal and external factors only for the product range
  4. DA tactical plan, which fixes weekly sales targets for each branch
  5. A vision statement, which sets the detailed quarterly operating targets for each team

Explanation

A mission statement describes purpose, customers and values, and so frames strategic choices. A budget and a tactical plan are short-term operational tools. A SWOT analysis is an analytical tool, not a purpose statement. A vision statement describes a desired future position, not detailed quarterly targets.

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