1.3, 1.4, 1.5 Flashcards
Mission Statement
Outlines the objectives of the business and how they aim to achieve them. It’s more focused and specific than the vision statement.
Vision Statement
Philosophy, vision or set of principles which steers the direction and behaviour of an organisation. Focuses on the long term aims of the business.
Aims
Business long term goals
Objectives
Medium-to-short term goals that clarify how the business will achieve its aims and reach its vision.
There are 3 types of objectives:
Strategic
Tactical
Operational
Strategic decisions
- Long term decisions +5 years
- Overall direction and objectives of the business
- Made by owners, chief executive, board of directors
- Outcome may be uncertain
- Are not detailed
- E.g expand, be socially responsible
Tactical decisions
- Medium to short term decisions
- Used to implement strategic decisions
- Made by senior/middle management
- Outcome more predictable
- E.g launch new products, open new store
Operational decisions
- Day to day objectives
- Affect the day to day running of the business
- Made by supervisors and junior managers
- Less risk involved
- Outcome is predictable
- E.g decisions on staff working hours for next week
SMART objectives
Specific: goals are focused and identify a tangible outcome, resources needed are taken to account
Measurable: clear definition of success, evaluates achievements and progress.
Attainable: goal should be challenging but realistic, reveals any potential challenges
Relevant: ensuring that the goal is worthwile, determines if its aligned with to your values and if its your pirority
Time-bound: target date, realistic time frame, motivates you to apply the focus and discipline needed to achieve the goal
Business strategy
Plan to achieve a strategic objective in order to work towards the aims of a business.
Changes in Internal Environment
Product: permformance of product in marketplace may need changes in the product
Finance: if number of sources of finance increase/decrease
Operations: a move towards environmentally friendly production or a elocation of a factory
Changes in External Environment (STEEPLE)
Social Factors:
-> demographic changes: ageing population, average age of first mothers increasing
-> socio-cultural changes: women working, increased leisure time, changes in fashion
Technological factors: rapid technology increase, Nokia not being able to keep up with Apple
Economic factors: incflation, exchange rates and interest rates, recession
Ethical factors: values of society changing ledading to sustainable businesses, diversity in the hiring process
Political factors: changes to the political system or political party
Legal factors: changes in laws, health and safety or minimun wage
Environmental factors: growing environmental awareness, change in packaging and greater focus on ecological disasters like oil spills
Ethical objectives vs Corporate Social Responsibility (CSR)
Ethical objectives are specific goals that a business sets itself based in established codes of behaviour.
CSR is the concept that a business has an obligation to operate in a way that will have a positive impact on society.
SWOT analysis
Tool that management can use to help with planning and setting objectives, first stage in planning process:
Strengths: internal areas the business performs well
Opportunities: external areas that the business could take advantage of in the future
Weaknesses: internal areas the business performs poorly
Threats: external threats to production, productivity, sales, profit that may occur in the future
Ansoff Matrix
Tool used to analyse and plan growth strategies for businesses:
Market penetration: selling more existing products in existing markets, safest option
Market development: selling existing products in new markets, riskier than market penetration as the business may not understand the market, Walmart in Peru
Product development: create new products in existing markets, extending product range
Diversification: new product in new market, risky as lacks familiarity/experience in the new market
Stakeholders
Individuals or groups that have a direct interest in a business because the actions of the business will affect them directly
Internal Stakeholders
Have direct monetary stake in the business
Employees
Managers
Owners
External Stakeholders
Groups outside a business who have less direct stake in the business but have an interest in what the business does:
Suppliers
Society
Government
Creditors
Shareholders
Customers
Stakeholder analysis
Determine how close each stakeholder is to decision making in the business.
Recession
A significant decline in economic activity spread across the economy, lasting more than a few months; visible in production employment.
Leads to unemployment
People have less money to spend
Boom period
Rapid economic expansion resulting in higher GDP, lower unemployment, higher inflation rate and rising asset prices.
Inflation
General increase in prices of goods and services in an economy. Wages do not increase in line with inflation.
Ethical trade
Taking into consideration the impact of your actions on stakeholders involved in your business.
Fair Trade
Aims to ensure better prices, decent working conditions and improved terms of trade for farmers in developing countries:
- Half owned by the producers of raw materials who are involved in setting and agreeing Fair Trade standards
- Provide producers with access to credit and long-term trading relationships
- Fair trade products include tea, coffee, bananas and flowers
Corporation tax
A tax paid to the government based on the net profit generated by a business at the end of a financial year.
