1.2 Understanding Businesses Flashcards
What is a Mission Statement?
A qualitative (worded) statement of an organisation’s aims which describes the general purpose of that organisation
Who are the key audiences for a mission statement?
Employees
Investors
Customers
Society
What are the common criticisms of a mission statement?
Not supported by actions of the business
Too vague and general
PR (Public Relations)
All need to “buy in”
What should a mission statement look like?
Purpose
Existence
Strategic
Not detailed
What are corporate aims?
Long term statement of what the business intends to achieve
What are objectives?
More precise and detailed goals or targets that must be achieved in order to achieve the corporate aims and mission statement
What are the key features in objectives?
SMART objectives Specific Measurable Achievable Realistic Time Specific
What are the common business objectives?
Profit Growth Survival Cash Flow Social and Ethical Objectives Diversification
What are the benefits of short-run objectives?
Reduces expenditure on training and developing new products
There may be an increase in profit
What are the benefits of long-run objectives?
The skills and performance of employees are improved if business invests into training
Expand into new markets and invests into developing new products
What are the possible issues of short and long-run objectives?
Long-run objectives can be expensive
Short run profits could fall
Short run objectives can lead to a business to be in a much weaker position
What does objectives give firms?
Clear direction and focus
Enables a firm to set its priorities and drive it to be successful
They motivate staff and ensure that they act in the interest of the business
They are also important to be able to measure success to if they have been achieved
What must objectives be to be effective?
SMART
