3.7.1 - Mission Corporate Objectives & Strategy Flashcards
What are objectives?
Short term specific and measurable goals used to achieve its long term aim
What are Corporate objectives?
More precise & detailed objectives that relate to the business as a whole
What is a business mission?
The overarching goal of a business and the reason for its existence/purpose.
What is a business vision?
A mental image of what you want your business to be at some point in the future , based on your goals.
What are aims/goals?
Long term strategy for a business of what it intends to achieve
What is a functional objective?
Objectives set for each department and are designed to ensure that corporate objectives are achieved
What is the purpose of corporate objectives?
- Provide strategic focus
- Measure performance of the firm as a whole
- Set the scene for more detailed functional objectives
- Inform decision making (making a strategic choice)
What are example of functional objectives for corporate objective?
increase sales - launch 5 new products in the next 2 years (marketing)
Reduce costs - increase factory productivity by 10% (operations)
increase cash flow - Reduce average time taken by customers to pay invoices from 75 to 60 days (finance)
Improve customer satisfaction - Achieve a 95% level of high customer service (people)
What acronym can be used to set objectives?
Specific Measurable Achievable Relevant Time-bound
What are external influences on corporate objectives & decisions?
Political environment Economic environment - interest rates, consumer spending Social change Technological change - machinery Legislation - employment law Environmental - carbon emissions Short-termism Competitors
What is short-termism?
When a business prioritises short-term rather than long-term performance
Why is short-termism good?
Emphasise performance of:
- share price
- revenue growth
- gross & operating profit
- Unit costs & productivity
- Return on capital employed
Why is short-termism bad?
May damage long-term performance of:
- market share
- quality
- innovation
- brand reputation
- employee skills & experience
- social responsibility & sustainability
What are indicators of short termism?
- bonuses based on short-term performance
- Low investment in research & development
- High dividend payments rather than reinvesting profits
- overuse of takeovers rather than internal growth
What is a strategy?
- How the business intends to achieve its objectives
- Usually long-term
- Made by senior management
