3.1- Corporate Objectives

Question 1

What is a mission statement?

Answer 1

A mission statement is a qualitative statement of an organisations aims.

Question 2

What are the 3 levels in a hierarchy of business objectives?

Answer 2

1. Mission statement and general aims
2. Corporate objectives
3. Department objectives

Question 3

What is a common idea that critics suggest about mission statements and the real purpose of them?

Answer 3

Critics say that mission statements are just a public relations tool.

Question 4

What are corporate objectives?

Answer 4

• Corporate objectives are goals that are aimed at satisfying the shareholders, so commonly related to profit or dividends.
• Corporate objectives should flow from the mission statement and corporate vision.
• Usually set by senior management for the whole company.

Question 5

What are SMART objectives?

Answer 5

Specific, Measurable, Achievable, Realistic, Time-Related

Question 6

What 5 departments do businesses usually divide themselves into?

Answer 6

Sales, Marketing, Human Resources, Operations, Finance

Question 7

What is the purpose of a mission statement?

Answer 7

• A mission statement can define the essence or purpose of the business in just a few sentences.
• It can also address their target audience directly.

Question 8

What are the 3 uses of mission statements?

Answer 8

Focus- Helps to focus and involve all employees in the business.

Profitability- helps to motivate employees to become more efficient which could have an impact on profitability.

Identity- helps to create an identity in a competitive marketplace.

Question 9

What are 4 limitations of mission statements?

Answer 9

1. Can be unrealistic and over optimistic.
2. Can be a waste of management time and resources.
3. Can lead to conflicts and inconsistencies when not properly written.
4. Can be ambiguous.
5. Can become obsolete as the business develops but the mission statement remains the same (e.g due to a merger/ change of product).

Question 10

What is a corporate strategy?

Answer 10

The overall scope and direction of a business and the way in which its various business operations work together to achieve particular goals.

Question 11

What are the uses of Ansoffs Matrix?

Answer 11

• A business can identify all their current products or services and their markets, then consider their future options for expansion using the matrix shown, considering opportunities, associated costs, benefits and risks.
• It also helps to identify potential new markets or marketing strategies for a business.

Question 12

What are the limitations of Ansoff’s Matrix?

Answer 12

• It only shows part of the picture
• It oversimplifies the market
• Large MNCs may need thousands of sub options and strategies
• When using Ansoff’s Matrix the business should also complete a SWOT and PETLE analysis to get a better idea of the whole picture, to see the issues from more than one angle.

Question 13

What is Porters strategic matrix?

Answer 13

He suggested that there were 3 generic business strategies that would get competitive advantage:

Cost leadership- making products at the lowest cost, may include outsourcing, lean management, standard no frills low cost products.

Differentiation- the product or service is unique and the USP adds value to the product

Focus- the product or service will serve a very small specific niche, high costs are passed on to customers, no close substitutes.

He also said that if a business failed to select one of these strategies that they would be in danger and “stuck in the middle”l

Question 14

What are the uses of Porters Strategic matrix?

Answer 14

• It establishes a clear direction for the business to go in.
• It identifies when a business may be in trouble.

Question 15

What are the limitations of Porter’s strategic Matrix?

Answer 15

• Not as relevant in very dynamic markets.
• May not be useful in a crisis situation.
• Over simplifies the market structure.

Question 16

What is the Boston matrix?

Answer 16

The Boston matrix is a marketing planning tool which helps managers to plan for a balanced product portfolio. It looks at two dimensions, market share and market growth, in order to assess new and existing products in terms of their market potential. Cash cow, star, dog, question mark (problem child).

Question 17

What are the uses of the Boston matrix?

Answer 17

• Good starting point when reviewing an existing product line to decide future strategy and budgets.
• Helps businesses analyse future opportunities or problems with their product portfolios.
• The conclusions drawn from such an analysis are to transfer the surplus cash from cash cows to the stars and the question marks, and to close down or sell off the dogs.
• In the end, question marks reveal themselves as either dogs or stars, and cash cows become so drained of finance that they inevitably turn into dogs.

Question 18

What are the limitations of the Boston Matrix?

Answer 18

• BCG matrix classifies businesses as low and high, but generally businesses can be medium also. So, the true nature of business may not be reflected
• High market share does not always lead to high profits. There are high costs also involved with high market share.
• Growth rate and relative market share are not the only indicators of profitability. This model ignores and overlooks other indicators of profitability
• This approach is considered as to be too simplistic

Question 19

What are the 3 distinctive capabilities suggested by John Kay?

Answer 19

Architecture- Relationships with employees, suppliers, customers.
Reputation- Through the customer experience.
Innovation- Bringing inventions to market.

Question 20

What are the features of Strategic decisions of a business?

Answer 20

• Long term direction of the business.
• What the business will do to meet it’s aims and objectives.
• Pro active decision making.
• Forward thinking, future planning.

Question 21

What are the features of tactical decisions of a business?

Answer 21

• Short or medium term decisions.
• How the business will implement it’s strategy.
• Reactive to competitor actions.
• Present day thinking, what is happening now that needs dealing with.

Question 22

What is SWOT analysis?

Answer 22

• Strengths; Internal factors within a business that can help it achieve its objectives
• Weaknesses; Internal factors that could prevent a business from achieving its objectives
• Opportunities; External business circumstances that can help it achieve its objectives
• Threats; External problems that may prevent a business from achieving its objectives

Question 23

How can SWOT analysis be used?

Answer 23

• SWOT can be used as a tool to formulate a strategy of growth and attack to use the business’s strengths to maximise opportunities in the market
• SWOT can be used as a tool to compete and defend, using the strengths to minimise the market threats
• SWOT can be used as a tool to improve and attack new markets or produce new products
• SWOT can be used as a tool to identify when to change and retreat