3.1.1 Role and purpose of corporate objectives

Question 1

mission statement

Answer 1

a qualitative statement of the businesses aims

Question 2

Business aims

Answer 2

a long term plan of which business objectives are derived

Question 3

Business objectives

Answer 3

A time assigned target derived from the goals and set in advance of strategy to achieve its corporate aims

Question 4

Business strategy

Answer 4

A medium to long term action plan to achieve the business objectives

Question 5

SMART objectives

Answer 5

An acronym used to guide goal setting. 
Specific 
Measurable 
Achievable 
Relevant 
Time-bound

Question 6

SMART objectives - Specific

Answer 6

the object should state exactly what is to be achieved

Question 7

SMART objectives - Measurable

Answer 7

An objective should be capable of measurement so that is is possible to determine if it has been achieved

Question 8

SMART objectives - Achievable

Answer 8

The objective should be realistic given the circumstances in which it is set and the resources available to the business

Question 9

SMART objectives - Relevant

Answer 9

Objectives should be relevant to the people responsible fro achieving them

Question 10

SMART objectives - Time-bound

Answer 10

Objectives should be set with a time frame in mind which should be realistic

Question 11

Common business objectives

Answer 11

Survival 
Profit maximisation 
Sales maximisation 
Market share 
Cost efficiency 
employee welfare 
Customer satisfaction
Social objectives

Question 12

Objective hierarchy

Answer 12

Corporate objective
Functional objectives - different departments
Unit objective
- corporate objectives translate down to each department or function

Question 13

Factors influencing whether or not objectives are fulfilled - internal

Answer 13

• Age of business
• Size and legal business
• Ownership
• Views of owners and managers
• Risk and attitude to risk
• corporate culture

Question 14

Factors influencing whether or not objectives are fulfilled - External

Answer 14

• Competition
• Legislation
• Political factors
• State of the economy
• social attitudes
• market conditions

Question 15

Mission statements

Answer 15

The over-riding goal, the reason for a business’s existence and its vision for the future

Question 16

Who is a mission statement intended for?

Answer 16

• Employees
• Customers
• Investors
• Society

Question 17

What makes a good mission statement? - what is its purpose?

Answer 17

• A clear sense of purpose
• Excites, inspires, motivates and guides
• Easy to understand and remember
• Differences business from competitors
• For all stakeholders

Question 18

Criticisms of mission statements

Answer 18

• Sometimes business actions do to reflect the statements - people will lose loyalty and integrity
• often too vague and general and not memorable
• they don’t always clearly set out purpose or the uniqueness compared to rivals
• Often a PR stunt
• Sometimes regarded cynically by staff as business not always keeping to their word
• to be effective everyone has to buy into it

Question 19

What factors influence the mission statement?

Answer 19

• culture
• ethos and values
• shareholders views
• Values of stakeholders - community and employees

Question 20

Strategic approaches

Answer 20

long-term plan which require many resources can be difficult to revers once implemented

Question 21

Tactical approaches

Answer 21

short-term plans which often require dew resources and can be stopped or reversed if this is required

Question 22

Links between mission, corporate objectives and strategy:

Answer 22

A business’ mission will inform the choice of corporate objectives as corporate objectives will be designed in such a way to meet the overall mission
Businesses can use strategies to work towards their overall corporate objectives