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
Identify examples of external constraints on the achievement of objectives
- Changes in the law
- State of the economy
- Competition
- Opinions and behaviour of external stakeholders
Focusing on 1 stakeholder group when setting objectives is…
counterproductive as it will alienate the others
The stakeholder approach means that in the future…
all stakeholders will benefit
What are corporate objectives in business?
key areas where the business wants to achieve results rather than focusing on a single objective.
It is important that corporate objectives cover a range of…
key areas where the business wants to achieve results rather than focusing on a single objective.
Corporate objectives provide…
the focus for setting more detailed objectives for the main functional activities of the business.
Give examples of ways in which a business may satisfy its social objectives
Being green
Offering sponsorship in the local community
Waste reduction
Business today are now likely to have an awareness of cultural issues regardless of their…
size
Which type of objective would CSR objectives be likely to clash with?
Profit objectives
What is a contingency plan?
A plan of action that prepares for both (un)predictable and quantifiable problems.
What are the 4 stages to a contingency plan?
- Identify what and how things could go wrong
- Understand the effects
- Devise plans to cope
- Implement strategy
Miscommunication from employer to employee can quickly escalate to a lack of
trust
3 tools to use when strategically planning?
Decision trees
Critical path analysis
Investment appraisal
What is business strategy?
The action place that the business puts in place to reach its objectives.
What is a tactic?
A particular step that a business takes to achieve its strategy.
A business can use internal and external ____, on a regular basis to formulate a strategic plan
audits
Internal audits look at the _____ and ________ of the business
strengths
weaknesses
External audits look at the _____ and ________ of the business
opportunities
threats
Many businesses employ ______ organisations to complete internal audits, although it is possible for management to do them for their own __________
external
departments
What is meant by benchmarking?
Comparing to the best competitor
What is the main acronym for completing an external audit?
PEST
What does PEST stand for?
Political Economic Social Technological factors
Outline POLITICAL factors to consider when completing PEST
Legislation on…
Employment, health and safety, competition, and taxation.
Outline ECONOMICAL factors to consider when completing PEST
Inflation, interest rate, currency value, unemployment and the economic cycle
Outline SOCIAL factors to consider when completing PEST
Characteristics of the human population…
Spending habits, distribution, age
Outline TECHNOLOGICAL factors to consider when completing PEST
Introduction and training may be required.
Recognition of old tech is needed.
