Business 1.3

Question 1

Vision statement

Answer 1

Describes a desired position for the company in the far future (“Where do we want to be?”)

Question 2

Mission statement

Answer 2

Purpose of business, states what the business is and does

How the vision statement will be achieved (“How do we get there?”)

Question 3

Mission statement

Answer 3

Purpose of business, states what the business is and does

How the vision statement will be achieved (“How do we get there?”)

Question 4

Vision and mission statement are what

Answer 4

Positive, ideal goals

Parallel to business

Customer centric

Answers:

Where are we now?

Where do we want to be?

How do we get there?

How do we know we are there?

Question 5

Criticisms of vision and mission statements

Answer 5

Being too vague, so therefore are rather meaningless and / or difficult to measure.

Being based on public relations (i.e., to make the organization “look good” - what the business aspires to and what it actually does on a regular basis may not align.

Being unquantifiable - mission and vision statements are not concerned with quantifiable goals but simply outline the aspirational purpose of an organization’s existence.

Vision statements (and many mission statements) are very long term, so may not ever materialise.

Virtually impossible to really analyse or disagree with, so may be ignored or not taken seriously by stakeholders such as employees.

Question 6

Goals

Answer 6

what business wants to achieve in the long-term

Question 7

Objectives

Answer 7

clearly defined short-term or medium-term tasks that a business sets in order to achieve goals

Question 8

Strategies

Answer 8

medium-term or long-term plans, methods, approaches, schemes that are used to achieve goals and objectives

Question 9

Tactics

Answer 9

short-term or medium-term actions that need to be taken in order to achieve objectives

Question 10

define each letter in SMART acronym when setting objectives

Answer 10

Specific, Measurable, Agreed, Realistic, and Time specific. An example of a SMART objective for a multinational company might be “to achieve sales of €10 million in European markets by 2023.”

Question 11

SMART is used when setting what?

Answer 11

Objectives

Question 12

What are some common business strategies (not necessary)

Answer 12

Corporate strategy : long-term plan that outlines clear goals for a company

Generic strategy determines methods of achieving competitive edge (middle management)

Operational strategy determines what company needs to do on day-to-day routine level and how to make generic and corporate strategies happen (junior management)

Question 13

Common business objectives

Answer 13

Profit
Growth
Shareholder value
Ethical objectives

Question 14

Profit

Answer 14

Profit is the difference between revenues and costs (more in Unit 3)

Incentives for entrepreneurship: Profit provides incentives for entrepreneurs to take risks and start new businesses. It also incentivizes business owners to remain in business and pursue growth for greater financial returns.

Maximizing profit: For many businesses, profit maximization is the top priority as it ensures the highest possible difference between total revenue and total costs. This helps businesses operate at an optimal size that enables them to sell their output efficiently.

Financial stability: Achieving long-term profit is crucial to ensure the business’s financial stability and prevent bankruptcy or closure. This allows the business to continue operating and growing, without relying heavily on external sources of finance.

Question 15

Growth

Answer 15

Growth means achieving an increase in one/some of the following: market share, total revenue, profit, capital employed, size of workforce, volume of output. Ultimately, growth results in higher profits

Question 16

Benefits of growth

Answer 16

Benefits of growth:

Higher sales revenue and profit - as a firm grows, its sales revenue increases, thereby improving the changes of higher profits.

Economies of scale - these are cost-saving benefits for firms as they grow larger, such as being able to purchase raw materials in bulk at a discounted price from their suppliers.

Reduced risks - larger firms tend to be less vulnerable to changes in the external environment such as an economic recession in the economy.

Question 17

Internal growth vs external growth

Answer 17

Internal growth uses the organization’s own resources, while external growth involves partnering with third-party resources and organizations.

Question 18

Methods of measuring the growth of a business

Answer 18

Sales revenue - the monetary value of the products that the business has sold, per time period).

Sales volume - the number of products that the business sells, per time period).

Profits - the financial surplus that remains after all costs of production have been deducted from a firm’s sales revenue).

Customers - the more customers that the business has, the larger it tends to be).

Number of employees - the more people that are hired by the business, the larger it tends to be.

Market share - this measures the firm’s sales revenue as a proportion of the whole industry’s sales revenue.

Question 19

Shareholder value

Answer 19

refers to what shareholders get through company’s ability to increase market capitalization (and thus share price) and/or dividends (through increasing the profits)

Survival: If a business cannot survive, it cannot generate any value for shareholders. Therefore, keeping the business afloat is crucial to maintaining shareholder value.

Profit: Generating profits is a primary goal of most businesses, as it directly impacts shareholder value by providing financial returns through dividend payments.

Growth: Enlarging the business can lead to increased sales revenue, profits, and customer loyalty, all of which can contribute to better shareholder value in the long run.

Market share: Gaining a larger market share can enhance brand awareness, value, and loyalty, which can help protect shareholder interests.

Ethical objectives and corporate social responsibility: Operating in a socially acceptable and responsible way can improve the corporate image of the company, which can ultimately benefit shareholders by safeguarding the company’s reputation and ensuring long-term profitability.

Question 20

Ethical objectives

Answer 20

refer to the tasks/targets that go beyond profit-making and are in line with moral behavior, sustainability and SR

Question 21

Strategic objectives with examples

Answer 21

Long term aims of a business organisation
-targets for the next couple of years

1)making as much profit as possible
2)growth
3)image and reputation

Question 22

Ethical objectives

Answer 22

-They are moral principles that guide decision making strategy.
-Morals of concern of what is right and what is wrong

Examples:
Reducing pollution
increase recycling
friendly waste disposal
treating employees well
fairer trade conditions

Question 23

Ethical objectives advantages

Answer 23

Do at home

Question 24

Ethical obectives disadvantages

Answer 24

Do at home

Question 25

Corporate social responsibility (CSR)

Answer 25

Corporate social responsibility (CSR) refers to the value, decisions, and actions taken by a business that impact society in a positive way. CSR is about an organization using ethical objectives to commit to behaving in a socially responsible way towards its internal and external stakeholders, not just to the owners or shareholders of the business

Question 26

Csr advantages

Answer 26

Better employee recruitment and retention

Sense of value/purpose for employees

Boosts company’s image/reputation

Risk management against scandals, accidents, etc.

Appeases pressure groups

Brand differentiation and smoother operations

Customer loyalty & goodwill

Question 27

CSR disadvantage

Answer 27

High compliance costs can lower profits

Forced to use materials that are specialized and may reduce profit

Ethics are not universal or unchanging anyway

Lower profits may decrease personal bonuses which may lead to greediness

Question 28

What is good to know about CSR

Answer 28

Attitudes change over time; acceptable practices before are unacceptable today.

CSR objectives adapt to changes in social norms/hot issues (i.e. tattoos, dyed hair, jeans, single parents, gender bias, child labor, smoking, obesity, global warming, etc.)

Question 29

Swot analysis advantages and disadvantages

Answer 29

Internal factors

Strengths – advantages that are basis for developing competitive advantage.

e.g. experienced management, patents, loyal workforce/customers

Weakness – negative factors

e.g. poorly trained workforce, limited capacity, obsolete equipment, etc.

External factors

Opportunities – potential areas for expansion of the business and future profits

e.g. political/economical policies, social statistics & trends, etc.

Threats – hindrances to the business

e.g. economic environment, market condition competitors.

Question 30

What are the internal and external factors in SWOT

Answer 30

Internal: Strenghts and weakness

external: opportunities and threats

Question 31

Role / features of mission statemewnt

Answer 31

It provides a sense of direction to the entire organization in terms of what to accomplish or pursue and which markets the organization will serve and how.

It reflects the corporate philosophy, identity, character, and image of the organization which can be used to communicate with external stakeholders such as customers, pressure group etc.

It could act as a motivator for employees by providing them with goals and a feeling of belonging to the organization.

It defines the overall aims and objectives of an organization.

Question 32

Role of vision statament

Answer 32

A vision statement is a statement of an organization’s overall objectives designed to aid decision making. In this instance it will refer to future plans for growth and facilities.

A vision statement
provides strategic direction and describes what the owner or founder wants the company to achieve in the future.