OxfordAQA A-Level Business: Mission, objective and SWOT analysis (9725) – Revision Notes

These notes condense section 3.3.1 Mission, objective and SWOT analysis of the OxfordAQA International AS and A-level Business (9725) specification, Version 1.1, for International AS exams May/June 2027 onwards and International A-level exams May/June 2028 onwards. Everything here is International A-level only and is assessed in Unit 3: Business analysis. If you are finishing the older 9625 specification, use your own specification instead. For full explanations and worked examples, read the study guide.

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Definitions to know cold

• Mission statement: a qualitative statement of a business’s purpose and values. No numbers, no deadline.
• Objective: a measurable target that moves the business towards its mission; best when SMART.
• Shareholder value: what the business is worth to its owners; for a plc, measured by market capitalisation.
• Shareholder returns: what owners receive, measured by dividend per share and dividend yield (plus any share price rise).
• Growth objective: a target for size, such as revenue, market share, outlets or new markets.
• Social objective: a target for the effect on people, such as fair pay or community projects.
• Environmental objective: a target for the effect on the planet, such as emissions or waste.
• SWOT: strengths and weaknesses (internal) plus opportunities and threats (external).
• Stakeholder mapping: placing stakeholder groups on a power-interest grid to decide how to manage each one.

Mission statements: purpose and value

Purpose: tell staff, customers and investors what the business stands for; anchor objectives and strategy; build a shared culture.

Value depends on: how specific it is; whether leaders act on it; whether it matches how the business really behaves. A vague or public-relations mission adds little and can breed cynicism when behaviour contradicts it.

Formulas

Measure	Formula
Market capitalisation	shares in issue × current share price
Dividend per share	total dividends ÷ ordinary shares in issue
Dividend yield (%)	dividend per share ÷ share price × 100
ROCE (%)	operating profit ÷ capital employed × 100
Capital employed	non-current liabilities + total equity
Gearing (%)	non-current liabilities ÷ capital employed × 100
Current ratio	current assets ÷ current liabilities
Acid test ratio	(current assets − inventory) ÷ current liabilities
Receivables days	trade receivables ÷ revenue × 365
Payables days	trade payables ÷ cost of sales × 365
Inventory turnover	cost of sales ÷ average inventory
Market share (%)	business’s sales ÷ total market sales × 100
Market growth (%)	change in market size ÷ original market size × 100
Price elasticity of demand	% change in quantity demanded ÷ % change in price
Cross-price elasticity	% change in quantity demanded of A ÷ % change in price of B
Income elasticity	% change in quantity demanded ÷ % change in income
Break-even output	fixed costs ÷ contribution per unit
Margin of safety	actual output − break-even output
Unit cost	total costs ÷ output
Capacity utilisation (%)	actual output ÷ maximum potential output × 100
Labour productivity	output ÷ average number of employees
Labour turnover (%)	employees leaving in a year ÷ average number of employees × 100
Labour cost per unit	total labour costs ÷ units of output

Non-formula data you must still interpret: customer satisfaction scores, environmental impact data (emissions, waste, energy use), employee engagement scores, employee representation rates (the share of staff represented by a trade union or similar body) and employee retention (the percentage of employees still at the business a year after recruitment).

Method: turning data into strengths and weaknesses

1. Calculate the measure, showing the formula and working.
2. Compare it with a benchmark: last year, a rival, the industry average or the firm’s own target.
3. Label it a strength or a weakness and say why in one sentence.
4. Link it to a decision or objective: what does it allow or prevent?
5. Weigh it: one figure rarely decides the case; look for a pattern across functions.

Example reminder: a current ratio of 1.2 is a weakness only if the industry norm or the firm’s needs suggest it should be higher. A supermarket with fast-selling stock can operate safely on a low ratio.

Which functional data goes where

Function	Data named in 3.3.1
Finance	profitability, liquidity, gearing, efficiency and shareholder ratios
Marketing	market share, size and growth; price, cross-price and income elasticity; correlation; break-even; margin of safety
Operations	labour productivity, customer satisfaction, unit costs, capacity, capacity utilisation, environmental impact
Human resources	labour turnover, engagement, labour costs, representation rates, retention rate

Objectives and the functional areas

• Growth → marketing research and promotion; more operations capacity; finance must raise funds; HR recruits and trains.
• Shareholder returns → finance pays out more and retains less; operations cut unit costs; HR controls labour costs.
• Environmental → operations changes processes and inputs; finance carries higher short-run costs; marketing can promote green credentials.
• Social → HR improves pay and conditions; operations chooses ethical suppliers; margins may fall in the short run.

Influences on objectives: mission and culture; ownership and legal structure; size and age; stakeholder power; internal position; external environment; past performance.

Stakeholders

Grid responses:

	Low interest	High interest
High power	keep satisfied	manage closely
Low power	monitor	keep informed

Power rises with: organisation into a group, the firm’s dependence on them, legal rights, media access. Interest rises with: how directly the decision affects them.

Overlap: success can serve many groups at once (profits fund wages, dividends and supplier orders). Conflict: one group gains at another’s expense (cost cuts vs jobs; expansion vs local environment).

Managing relationships: consult early, communicate clearly, compromise where possible, and prioritise using the map.

Stakeholder actions: boycotts, strikes, resignations, tighter credit, refused loans, share sales or votes against directors, regulation, planning objections. Effects: higher costs, delays, lost sales, damaged reputation.

Must-know distinctions

• Mission vs objective: purpose in words vs a measurable target with a deadline.
• Shareholder value vs returns: what the stake is worth vs what owners receive.
• Dividend per share vs dividend yield: an amount of money vs a percentage of the share price.
• Strength vs opportunity: internal and controllable vs external and outside control.
• Labour turnover vs retention: the share who leave vs the share of recruits who stay.
• Correlation vs causation: a strong r value shows two variables move together, not that one causes the other.
• Overlap vs conflict: shared benefit vs one group’s gain is another’s loss.

Quick self-test

1. A plc has 20 million shares priced at £4.50. Calculate its market capitalisation.
2. A company pays total dividends of £2.16 million on 12 million shares. The share price is £4.00. Calculate dividend per share and dividend yield.
3. Non-current liabilities are £300,000, total equity £900,000 and operating profit £210,000. Calculate gearing and ROCE.
4. Current assets are £250,000 including inventory of £100,000; current liabilities are £200,000. Calculate the acid test ratio.
5. A 10% price cut raises quantity demanded by 15%. Calculate PED and state what it shows.
6. Fixed costs are £24,000, price £15 and variable cost £9 per unit. Sales are 5,500 units. Calculate break-even output and the margin of safety.
7. Six of an average 40 employees left during the year. Calculate labour turnover.
8. Actual output is 1,800 units and maximum potential output is 2,000. Calculate capacity utilisation.
9. A firm’s sales are £3.6 million in a market worth £48 million. Calculate market share.
10. A new low-cost rival enters the market. Which SWOT heading does this go under?
11. A bank has made a large loan to the business but follows its decisions only loosely. Where on the grid does it sit?
12. State one reason a mission statement may have little value.

Answers

1. 20,000,000 × 4.50 = £90 million.
2. DPS = 2,160,000 ÷ 12,000,000 = £0.18; yield = 0.18 ÷ 4.00 × 100 = 4.5%.
3. Capital employed = 1,200,000; gearing = 300,000 ÷ 1,200,000 × 100 = 25%; ROCE = 210,000 ÷ 1,200,000 × 100 = 17.5%.
4. (250,000 − 100,000) ÷ 200,000 = 0.75.
5. PED = +15 ÷ −10 = −1.5: demand is price elastic, so the price cut raises revenue.
6. Contribution = £6; break-even = 24,000 ÷ 6 = 4,000 units; margin of safety = 5,500 − 4,000 = 1,500 units.
7. 6 ÷ 40 × 100 = 15%.
8. 1,800 ÷ 2,000 × 100 = 90%.
9. 3.6 ÷ 48 × 100 = 7.5%.
10. Threat: it is external and outside the firm’s control.
11. High power, low interest: keep satisfied. Its power could rise sharply if repayments look at risk.
12. It is too vague to guide decisions, or behaviour contradicts it (either answer).

Where marks are usually lost

• Writing a mission statement with a numerical target, which makes it an objective.
• Dividing total dividends by the share price and calling it the yield, skipping dividend per share.
• Using total equity alone as capital employed in ROCE or gearing.
• Stating “ROCE is 15%, a strength” without a comparison to justify the label.
• Placing external events such as new competitors or regulation under strengths or weaknesses.
• Mixing up the sign of cross-price elasticity: positive means substitutes, negative means complements.
• Treating correlation data as proof that one variable caused the other.
• Naming stakeholder groups without explaining their power and interest in the decision in the case.
• Listing objectives without tracing their impact on a named functional area.

Official syllabus

OxfordAQA International AS and A-level Business (9725) specification, Version 1.1, for International AS exams May/June 2027 onwards and International A-level exams May/June 2028 onwards. Published by OxfordAQA.