1. Introduction To Business Flashcards
What is an organisation?
A social arrangement which pursues collective goals, controls its own performance and has a boundary separating it from its environment
What are examples of differences between organisations?
Ownership
Control
Activity
Profit or not for profit
Size
Legal status
Access to finance
Technology
What is a business?
An organisation that is orientated towards making a profit for its owners
What is the primary objective of a profit orientated business?
To maximise owner wealth
What is the primary objective of a not for profit organisation?
To maximise benefits to beneficiaries
What is a stakeholder?
A person or group of persons who has a stake in the organisation, stakeholders are virtually everybody who has anything to do with the business
Who are the primary stakeholders of the business?
Shareholders or owners
Who are the secondary stakeholders of a business?
Management
Employees
Customers
Suppliers
Lenders
Government
Analysts/advisers/experts
Society as a whole
Environment
What are secondary objectives of businesses?
Market standing
Innovation
Productivity
Staff development
Corporate responsibility
Although managers of a profit orientated organisation should strive to maximise shareholder wealth, what other objectives could they choose?
Profit satisficing
Revenue maximisation
Multiple objectives
Business constraints
Environmental, social and governance (ESG)
What is a mission?
The most generalised type of objective which can be thought of as an expression of its raisin d’être (reason for existence)
What is a mission statement?
The written communication of the mission to internal and external stakeholders, usually a brief statement set out in general terms which is not quantifiable or time constrained
What should a successful mission statement contain?
Purpose - why does the organisation exist and what does it aim to achieve it’s stakeholders?
Strategy - what resources, competencies or generic strategy give the company a competitive advantage?
Policies - what standards and behavioural patterns are adopted within the organisation?
Values - what beliefs do the managers and employees share?
What are objectives?
Quantitative operational goals that should be SMART
What does SMART stand for?
Specific - clear statement, easy to understand
Measurable - success or failure can be quantified
Achievable - it is pointless setting i achievable objectives
Relevant - appropriate to the mission and stakeholders
Timed - have a time period for achievement
