1.3 business objectives Flashcards
vision statement
a philosophy, vision or set of principles which steers the direction and behaviour of an organisation
mission statement
states a company’s purpose and explains why the business exists
generally include the business aims and, whether expressly stated or implied, indicates its most important values
business objectives
the articulated, measurable targets that a business must meet to achieve the aims or long term goals of the business. It is critical that objectives are specific and measurable
strategic objectives
the long term goals of a business that indicate how the business intends to fulfil its mission
strategic objectives usually include performance goals, such as increasing market share or improving profitability
tactical objectives
short to medium term targets that, if consistently met, will help a business reach its strategic goals
whereas strategic objectives are typically set by the board of directors with top executive management, tactical objectives are usually set by executive management working with middle level management
operational objectives
day to day objectives set by floor managers (and sometimes workers themselves) so that the company can reach its tactical objectives
what does SMART objectives stand for
specific
measurable
achievable
relevant
time-specific
business strategy
is a plan to achieve a strategic objective in order to work towards the aims of the business
this strategy will be medium to long term and will require senior managers to make the decisions approved by the owners and/or the CEO
business tactic
is a plan to achieve a tactical objective to work towards the strategies of the business, which themselves are the path to reaching the aims of the business
this tactic will be short term and will require middle managers to make the decisions approved by the senior managers
tactics are easier to change
what may changes in the internal environment of a business include
leadership
HR
organization
product
finance
operations
what may changes in the external environment of a business include
STEEPLE
social
technological
economic
ethical
political
legal
ecological
corporate social responsibility
is the view that businesses, rather than focusing solely on increasing shareholder value, should contribute to the economic, social, and environmental well-being of society
why do organisations set ethical objectives
customer loyalty
positive image
positive work environment
reduction of the risk of legal redress
satisfying customers ever higher expectations for ethical behaviour
increasing profits
growth strategies
strengths/opportunities
defensive strategies
threats/weaknesses
re-orientation strategies
weaknesses/opportunities
defusing strategies
strengths/threats
when does market penetration occur
when a business grows by increasing its market share, selling more of its existing products in the same market
market development
expands the market by looking for new markets or for new market segments in the existing markets
key factors towards the success of market penetration
- growth potential of market
- strength of customer loyalty
- power and ability of competitors
key factors to reduce the risks of market development
- effective market research
- having local knowledge on the ground
- having an effective distribution channel
product development
development of new products for the existing market
key factors to reduce risks of product development
- effective market research
- strong research and development system
- have first mover advantage
diversification
- riskiest growth strategy
- involves introducing a new product into a new market
- combines two elements of risk: lack of familiarity/experience in new market and the fact that the new product is unexpected
key factors to reduce the risk of diversification are
- effective market research
- due diligence testing to determine: attractiveness and cost of entering the market
- recognition of existing business
- possible tie-ups with other business with the necessary experience
