Aims and objectives

Question 1

What are the benefits of having a vision statement?

Answer 1

• a clear vision can give the business a clear identity and ethos
• can help in setting objectives and support the business strategy
• focus senior managers on the tasks to achieve the vision
• communicates to employees how they can contribute and can improve employee engagement
• commits resources to achieving the vision.

Question 2

What is a vision statement?

Answer 2

• A vision statement is a description of what a business sets out to achieve in the medium to long term.
• should set out a clear guideline to senior management the future direction of the business.
• should define core values.

Question 3

What are mission statements?

Answer 3

• an organisation’s mission statement is a broad statement of its aims and values.
• it will guide the everyday operations and decision making of the business
• foundation stone in the overall strategy
• by defining a mission an organisation is making a clear statement of its purpose.

Question 4

What are some reasons for having a mission statement?

Answer 4

• helps to ensure that all stakeholders are clear on the purpose of the business so everyone can be focused on the same goals and objectives
• helps with the strategic planning since this should be the starting point
• gives some transparency for investors; they understand how their capital will be put to use
• helps customers understand the ethics and objectives of a company.

Question 5

what are a businesses aims?

Answer 5

• survival
• growth
• sales maximisation
• increase shareholder value
• environment/ethics
• profit maximisation

Question 6

What is survival?

Answer 6

• around 30% of business fail within their first 2 years of being set up.
• for small businesses the initial objective is to survive the difficult time of gaining customers, establishing a good reputation.

Question 7

profit maximisation?

Answer 7

• the objective for most businesses especially operating in the private sector, is to maximise profits.
• profit maximisation is possibly the main aim for most businesses and entrepreneurs
• the measures of profitability are gross profit and gross profit margin.
• profits can be increased by increasing revenue or reducing costs.

Question 8

Increasing shareholder value?

Answer 8

• this is measured by the amount of dividend paid to shareholders and any increases in share price.
• This objective is concerned with increasing the price of the businesses’ shares on the stock market.
• many managers also have an interest in increasing share price because they may have bonus schemes related to increase in share prices.

Question 9

corporate social responsibility/environmental/ethics

Answer 9

• there are businesses that will try to minimise the impact of their business activities on the environment and consider the needs of society.
• e.g. businesses may try to ensure suppliers in developing countries have fair working conditions.
• this objective may come at a cost though in terms of lower profits for the business.
• however, modern businesses have to be respectable to the wider community and take their social and environmental responsibilities seriously.

Question 10

What are SMART objectives?

Answer 10

• SPECIFIC; objectives should be clear enough so that all stakeholders understand what the objective is.
• MEASURABLE; objectives should be measured to make sure objectives have been achieved. measurement should be numeric.
• ACHIEVABLE; are the objectives achievable and attainable?
• REALISTIC; is the business likely to achieve the objectives with the resources available?
• TIME LIMITED OR CONSTRAINED; a timescale needs to be set for achieving the objectives