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

This guide follows 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. It teaches section 3.3.1 Mission, objective and SWOT analysis, the first section of 3.3 Business analysis. All of it is International A-level only content. If you are finishing the older 9625 specification, use your own specification, not this page.

Recall: revision notes · Test yourself: practice questions · Course hub: OxfordAQA A-level Business · Checklist: 9725 checklist · Find your gaps: free diagnostics

What this section covers

Spec area (3.3.1)	What you must be able to do	Stage
Mission, objectives and the business functions	Explain the purpose and value of mission statements; calculate market capitalisation, dividend per share and dividend yield; explain growth, social and environmental objectives; analyse how objectives affect functional areas and what influences them	International A-level only
SWOT analysis	Judge the value of SWOT; calculate and interpret financial, marketing, operations and HR data to identify strengths and weaknesses	International A-level only
Stakeholder needs when making decisions	Use stakeholder mapping; explain influences on power and interest; analyse overlap and conflict in stakeholder objectives; manage relationships; assess stakeholder actions	International A-level only

How it is examined. Section 3.3 is assessed in Unit 3: Business analysis (1 hour 45 minutes, 80 marks, 30% of the International A-level), built on two case studies. The specification says the first question on each case study is a 4-mark calculation. The same SWOT data returns in Unit 4, where section 3.4.1 asks how SWOT analysis influences the choice of strategy. AS stakeholder basics are in the What is business? study guide.

1. Mission statements

A mission statement is a short, qualitative statement of why a business exists and what it values. It answers “what are we here for?” rather than “what number must we hit?”.

Purpose: to communicate purpose and values to employees, customers and investors; to give a reference point for objectives and strategy; to shape culture and motivate staff.

Value (evaluate both sides):

• Useful when it is specific enough to guide decisions and managers act on it. “Affordable fresh food within walking distance” rules some strategies in and others out.
• Of little value when it is so vague it could belong to any firm, is written for public relations, or is contradicted by daily behaviour, which damages trust.

2. Objectives

Objectives turn the mission into measurable targets. Effective ones are SMART: specific, measurable, achievable, relevant and time-bound. Section 3.3.1 names five kinds.

Shareholder value and shareholder returns

Shareholder value is the value of the business to its owners. For a public company, a useful measure is market capitalisation:

Market capitalisation = total number of shares in issue × current market price per share

Shareholder returns are what owners receive. Two measures:

Dividend per share = total dividends paid ÷ number of ordinary shares in issue

Dividend yield (%) = (dividend per share ÷ market price per share) × 100

Worked example: Kitewood Foods plc

Kitewood has 48 million ordinary shares in issue. The share price is £3.25 and the company paid total dividends of £7.2 million this year.

Market capitalisation = 48,000,000 × £3.25 = £156,000,000 = £156 million
Dividend per share    = £7,200,000 ÷ 48,000,000 = £0.15 (15p)
Dividend yield        = (0.15 ÷ 3.25) × 100 = 4.615...% = 4.62% (2 d.p.)

Interpretation: if the share price falls to £3.00 with the same dividend, the yield rises to 5.00% but market capitalisation falls to £144 million. A higher yield can signal lost confidence, so compare it with similar companies and savings rates.

Growth, social and environmental objectives

• Growth: revenue, market share, outlets, new markets. Brings economies of scale but needs finance.
• Social: fair pay, community projects, ethical sourcing, staff wellbeing.
• Environmental: lower emissions, less waste, renewable inputs.

Impact of different objectives on functional areas

Trace one objective through all four functions.

Objective	Marketing	Operations	Finance	Human resources
Growth into a new region	New research and promotion budget	Extra capacity or a new site	Raise funds; cash flow pressure	Recruit and train staff
Higher shareholder returns	Focus on profitable lines	Cut unit costs	Pay out more profit, retain less	Control labour costs
Environmental	Green positioning, eco labels	New processes, recycled inputs	Higher short-term costs	Train staff in new methods
Social	Ethical brand message	Ethical suppliers	Lower margins in the short run	Better pay and conditions

Objectives can conflict. Higher dividends leave less retained profit to fund growth or environmental investment.

Influences on the objectives a business sets

• Mission and culture
• Ownership: plc shareholders may push for returns; a family owner may value control
• Size and age: a new firm may aim for survival, an established one for growth or returns
• Stakeholder power: major investors, regulators, unions
• Internal position: finance, capacity, skills (shown by SWOT)
• External environment: competition, the economy, law, technology
• Past performance

3. SWOT analysis

SWOT lists strengths and weaknesses (internal) and opportunities and threats (external). Sections 3.3.3 and 3.3.4 analyse the external side; here the focus is using data to judge strengths and weaknesses.

Value: simple, quick and cheap; gives managers a shared picture; matches strengths to opportunities; a starting point for objectives and strategy.

Limitations: a snapshot that soon dates; subjective unless backed by data; factors are not weighted; a list is not a plan.

Strengths and weaknesses from data

A figure is only a strength or a weakness in comparison with something: last year, a competitor, the industry average or the business’s own target.

Worked example 1: financial ratios, Calderbeck Ceramics Ltd (£000)

Data: revenue 4,800; cost of sales 2,880; operating expenses 1,320; non-current liabilities 1,500; total equity 2,500; inventory 400; trade receivables 480; cash 20; current liabilities 600; trade payables 360.

Gross profit         = 4,800 − 2,880 = 1,920   → gross margin 1,920/4,800 × 100 = 40%
Operating profit     = 1,920 − 1,320 = 600     → operating margin 600/4,800 × 100 = 12.5%
Capital employed     = 1,500 + 2,500 = 4,000
ROCE                 = 600/4,000 × 100 = 15%
Gearing              = 1,500/4,000 × 100 = 37.5%
Current assets       = 400 + 480 + 20 = 900
Current ratio        = 900/600 = 1.5
Acid test ratio      = (900 − 400)/600 = 0.83
Receivables days     = 480/4,800 × 365 = 36.5 days
Payables days        = 360/2,880 × 365 = 45.6 days
Inventory turnover   = 2,880/400 = 7.2 times (inventory taken as the average)

The industry averages are ROCE 11%, gearing 45%, acid test 1.0. Strengths: ROCE above average, lower gearing, and customers pay about nine days before Calderbeck pays suppliers. Weakness: an acid test below 1 means it relies on selling inventory to meet short-term debts. Shareholder ratios (dividend per share and yield, above) complete the financial picture. Section 3.3.2, on analysing the existing internal position, develops ratio analysis further.

Worked example 2: marketing, operations and HR data, Sunfield Juices

Marketing data. The market grew from £50 million to £54 million: growth = 4/50 × 100 = 8%. Sunfield’s sales were £6.5 million last year and £6.48 million this year, so its market share fell from 13% to 12%. Flat sales in a growing market are a weakness.

• A 5% price rise cut quantity demanded by 8%: PED = −8 ÷ 5 = −1.6 (price elastic, so little pricing power).
• A rival cut its price by 10% and Sunfield’s quantity fell 6%: cross-price elasticity = −6 ÷ −10 = +0.6 (substitutes).
• Incomes rose 4% and quantity rose 2%: income elasticity = 2 ÷ 4 = +0.5 (normal good, income inelastic).
• The correlation between monthly advertising spend and sales is +0.85: a strong positive link, though correlation does not prove that advertising caused the sales.

Break-even. Fixed costs £1.2 million; price £2.40; variable cost £1.60 per bottle.

Contribution per unit = 2.40 − 1.60 = £0.80
Break-even output     = 1,200,000 ÷ 0.80 = 1,500,000 bottles
Actual output         = 2,700,000 bottles (6,480,000 ÷ 2.40)
Margin of safety      = 2,700,000 − 1,500,000 = 1,200,000 bottles (44.4% of output)

A wide margin of safety is a strength.

Operations data. Total costs = 1.2m + (1.60 × 2.7m) = £5.52 million, so unit cost = 5.52m ÷ 2.7m = £2.04. With 45 employees, labour productivity = 2,700,000 ÷ 45 = 60,000 bottles per employee. Capacity is 3.6 million bottles, so capacity utilisation = 2.7 ÷ 3.6 × 100 = 75%. A customer survey shows 78% satisfied against a target of 85% (weakness), and emissions fell from 52 kg to 47 kg of CO₂ per 1,000 bottles, a 9.6% cut (strength).

HR data. Nine of an average 45 employees left: labour turnover = 9/45 × 100 = 20%. Of 12 people recruited a year ago, 9 are still employed: retention = 75%. Employee costs of £1.08 million are 16.67% of turnover, or £0.40 per bottle. An engagement survey scores 64%, and 30 of 45 staff are represented by a trade union (a representation rate of 66.7%). High turnover alongside middling engagement is a weakness to probe.

4. Stakeholder needs when making decisions

Stakeholder mapping

Stakeholder mapping places each group on a grid of power (ability to affect the business) against interest (how much it cares about a decision), to decide how much attention each needs:

• high power, high interest: manage closely and involve in decisions
• high power, low interest: keep satisfied
• low power, high interest: keep informed
• low power, low interest: monitor

It focuses limited management time, but positions change and placing a group is a judgement.

Influences on power and interest: size of the group and whether it is organised; how dependent the business is on it (a single key supplier or lender); legal rights; access to media; how directly the decision affects the group.

Overlap, conflict and managing relationships

Objectives overlap when one action serves several groups: a profitable, growing firm can pay dividends, raise wages and buy more from suppliers. They conflict when gains for one group cost another: cutting labour costs raises short-term returns but hurts employees; a new site creates jobs but adds traffic for the community.

Worked example: Juniper Rail depot

Juniper Rail plans a larger maintenance depot on the edge of a town. The planning authority (high power, high interest) must be managed closely. Nearby residents (low power alone, high interest) need regular information, and their power rises if they organise a campaign. Shareholders (high power, moderate interest) want higher returns; employees gain jobs.

Managing the relationships: consult residents early, offer noise barriers and limited night working, brief the planning authority before applying, and explain the payback timing to shareholders.

Actions stakeholders can take: customers switch or boycott; employees strike or leave; suppliers change credit terms; lenders refuse finance; shareholders sell or vote against directors; government regulates or fines; communities object to planning applications or campaign. Each can raise costs, delay plans or harm reputation.

Value of considering stakeholder needs: fewer disputes, better reputation and loyalty, decisions that last. But consultation takes time and no decision satisfies everyone.

Common errors

• Calling a mission statement an objective: a mission has no number or deadline.
• Dividing total dividends by market capitalisation and calling the answer dividend per share.
• Labelling a figure a strength without a comparison.
• Putting a rival’s price cut under weaknesses: it is an external threat.
• Treating a correlation as proof of cause.
• Listing stakeholders without saying which has power over this decision and why.

Next: drill the formulas in the revision notes, then try the practice questions. Elasticity and correlation were introduced at AS in the marketing study guide.

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.