3.7.1 (1) Corporate Objectives Flashcards
Objectives
Statements of specific outcomes that are to be achieved
What are business objectives?
- Specific intended outcomes of business strategy
2. Targets which the business adopts in order to achieve its aims
Corporate Objectives
Those that relate to the business as a whole
What are corporate objectives driven by?
Mission, vision and aims or goals
Mission
Overall purpose of the business
Vision
Overall aspiration of the business
Aims and goals
Statements of what business intends to achieve
What are the main purposes of corporate exams?
- Provide strategic focus
- Measure performance of the firm as a whole
- Inform decision-making (which involved strategic choice)
- Set the scene for more detailed functional objectives
SMART Objectives
Specific Measurable Achievable Relevant Time-Bound
Specific
State exactly what is to be achieved
Measurable
Capable of measurement - possible to determine whether it has been achieved
Achievable
Realistic considering circumstances in which it is set ad the resources available to the business
Relevant
Should be relevant to the people responsible for achieving them
Time Bound
Should be set with a realistic time-frame in mind
Hierarchy of Objectives - what is it?
Corporate objectives are positioned at the top as the most important, with tactical and operational towards the bottom.
How is the Hierarchy ordered?
Mission Corporate/Strategic Functional Team Individual
Examples of areas where corporate objectives are used
Market, innovation, productivity, profitability
Examples of areas where functional objectives are used
Increased sales, reduce costs, increase cash flow, improve customer satisfaction
Internal influences of corporate objectives
Business ownership Attitudes to profit Ethical stance Organisational culture Leadership Strategic position and resources Stakeholders influence
External influences of corporate objectives
Short-termism Economic environment Political/legal environment Competitors Social and technological change
What is short-termism?
Where a business prioritises short-term rather than long-term performance
Why are businesses concerned by short-termism?
- stock market focus on latest financial performance
- bonuses and other financial incentives are largely based on short-term performance
- frequent changes in leadership and strategy
What would businesses focus on using a short-termist approach?
- Share price and market capitalisation
- Revenue growth
- Gross and operating profit
- Unit cost and productivity
- Return on capital employed (ROCE)
Strategy
How a business intends to achieve its objectives
Usually long term
Made by senior management
Tactics
Support achievement of specific targets
Usually routine and short-term
Often delegated to junior management
Examples of strategic decisions
- External growth via takeover
- Enter international market
- Adopt cost minimisation strategy
- Rebrand the business
- Close a major business suit
Examples of tactical decisions
- Relocate staff from takeover HQ
- Choose locations in new market
- Identify specific cost savings
- Launch rebranding campaign
- Determine detailed closure plan
