1. Business Objectives and Strategy Flashcards
State what is meant by a stakeholder
A person or party with an interest in the success of a business. They will benefit from this success
Stakeholders can be classified as either i______ or e______
Internal
External
Examples of internal stakeholders include…
Owners
Employees
Managers
Examples of external stakeholders include…
Suppliers
Customers
Local community
Lenders
How may a business’ OWNERS affect the objectives set?
- Depends upon sole trader/partnership/Ltd
- Owners want best return possible on money they invest
- Likely to want to see growth so their returns increase
?? (CAPTURE MARKET AND CUSTOMER LOYALTY VIA LOW PRICES > IMMEDIATE MAX PRICES) ??
EVAL: In the immediate future this tactic may reduce profits
How may a business’ EMPLOYEES affect the objectives set?
- Want a high a wage as possible
- Job security
- More than legal holiday entitlement, sick pay, etc
- Job satisfaction: interesting and challenging, training - improve their skills and thus their pay and promotion prospects
How may a business’ CUSTOMERS affect the objectives set?
- Want the BEST QUALITY but the LOWEST PRICE
- Product innovation (better products than last year)
- Good customer service (e.g. call centre)
- Expensive product? - credit facilities?
- Aware of ethical issues
- Customer dissatisfaction = loss of sales
How may a business’ SUPPLIERS affect the objectives set?
- Want to see the business it supplies prosper = repeat, and larger orders
- Want to be paid as promptly as possible
- Build a long-term, loyal relationship: use regularly, involve in expansion plans
- Change suppliers constantly/ delay payments? = supplier will not help out in future
- Balance between NOW and beneficial FUTURE relationship
How may a business’ LENDERS affect the objectives set?
- Banks want to be paid the agreed amount at the agreed time
How may a business’ LOCAL COMMUNITY affect the objectives set?
EXTERNAL BENEFITS:
- Bring jobs
- Community projects
- Improved roads
- Reduced crime
EXTERNAL COSTS:
- Additional congestion and pollution (e.g. noise)
-
Why does the GOVERNMENT have an interest in the success of all businesses?
- Lower unemployment
- Less benefits to be paid
- Greater tax revenue
- Business may start to export as it grows, improving the UK’s trading position
Identify the indirect stakeholder to all businesses that has an interest in their success
The government
What is meant by PRIVATE COSTS AND BENEFITS?
The costs that a business pays (e.g. labour costs) and the benefits it gets from it activities (e.g. profit)
What is meant by SOCIAL COSTS AND BENEFITS?
The overall, or “true cost” of a business’ activities, taking into account external costs and benefits as well as private ones.
Outline the hierarchy of objectives
Mission Statement
Aims/goals
Strategic objectives
Tactical objectives
What is a business’ mission statement’s purpose?
A mission statement gives a general idea of what the business exists to do and its purpose is to set this down for the benefit of all stakeholders.
What is a business aim/goal?
Aims/goals are more specific than a mission statement. They could be to survive, break even, increase market share or to increase profits.
What are business objectives?
The objectives are measurable targets of how to achieve business aims.
What are strategic objectives?
How a business plans to achieve its aims or goals, often a long-term approach
What are tactical objectives?
Short-term objectives necessary to achieve the business’ strategic objectives.
Which type of objective would concern the day-to-day activities of the business?
Tactical objectives
What mnemonic can be used when setting objectives?
SMART
What does SMART stand for?
Specific (all understand) Measurable (can identify success) Agreed (between departments) Realistic (avoid demotivation) Time-bound (focus)
Identify examples of internal constraints on the achievement of objectives
- A lack of finance
- Poor communication
- A conflict of interests between departments
- An industrial dispute with the workforce
