business objectives

Question 1

what are SMART objectives

Answer 1

S– Specific: Objectives should focus on what the business does and should apply directly to that business.
M– Measurable: Objectives that have a quantitative value are likely to prove to be more effective targets for directors and staff to work towards.
A– Achievable: Setting objectives that are almost impossible in the time frame given will be pointless. .
R– Realistic and relevant: Objectives should be realistic when compared with the resources of the company and should be expressed in terms relevant to the people who have to carry them out.
T– Time-specific: A time limit should be set when an objective is established

Question 2

mission statement

Answer 2

a statement of the business’s core aims, phrased in a way to motivate employees and to stimulate interest by outside groups.

Question 3

typical corporate objectives

Answer 3

survival
growth
market share
profit maximization
profit satisficing
corporate social responsibility
maximizing shareholder value

Question 4

shareholder value

Answer 4

the financial worth owners of a business receive for owning shares in the company

Question 5

ethical code of conduct

Answer 5

Ethical code (code of conduct): a document detailing a company’s rules and guidelines on staff behavior that must be followed by all employees.

Question 6

profit satisficing and maximization

Answer 6

profit satisficing: means aiming to achieve enough profit to keep the owners happy but not aiming to work flat out to earn as much profit as possible

profit maximization: a process business firms undergo to ensure the best output and price levels are achieved in order to maximise its returns

Question 7

corporate social responsibility

Answer 7

this concept applies to those businesses that consider the interests of society by taking responsibility for the impact of their decisions and activities on customers, employees, communities and the environment.

Question 8

hierachy of objectives

Answer 8

file:///C:/Users/THINA/Pictures/hierarchy-of-objectives.png

Question 9

factors that determine corporate objectives

Answer 9

corporate culture
the size and legal form of the business
public sector or private sector business

Question 10

benefits of mission statements

Answer 10

■ quickly inform groups outside the business what the central aim and vision are
■ can prove motivating to employees, especially where an organisation is looked upon for being for example environmentally friendly
■ often include moral statements or values to be worked towards, and these can help to guide and direct individual employee behaviour at work

Question 11

disadvantages of mission statements

Answer 11

■ too vague and general, so that they end up saying little that is specific about the business or its future plans
■ based on a public relations exercise to make stakeholder groups feel good about the organisation

Question 12

Corporate objectives

Answer 12

goals or targets quite specific to each business that can themselves be broken down into strategic departmental targets

Question 13

stages in this decision making framework are:

Answer 13

1 Set objectives.
2 Assess the problem or situation.
3 Gather data about the problem and possible solutions.
4 Consider all decision options.
5 Make the strategic decision.
6 Plan and implement the decision.
7 Review its success against the original objectives.

Question 14

Management by objectives

Answer 14

a method of coordinating and motivating all staff in an organisation by dividing its overall aim into specific targets for each department, manager and employee.

Question 15

Communicating objectives results in:

If employees are communicated with– and involved in the setting of individual targetS

Answer 15

■ Employees and managers achieving more
■ Employees seeing the overall plan
■ Creating shared employee responsibility
■ Managers more easily staying in touch with employees’ progress

Question 16

Most decisions have an ethical or moral dimension. Forexample

Answer 16

■ Should a toy company advertise its products to young children so that they pester their parents into buying them?
■ Is it acceptable to take bribes to place an order with another company?
■ Should a bank invest in a company that manufactures weapons or tests new chemicals on animals
■ Is it acceptable to feed genetically modified food to cattle?

Question 17

benefits from acting ethically:

Answer 17

■ Avoiding potentially expensive court cases can reduce costs of fines
■ Ethical businesses are more likely to be awarded government contracts.
■ Well-qualified staff may be attracted to work for the companies with the most ethical and socially responsible policies.

Question 18

Why should departmental objectives be coordinated

Answer 18

To be able to reach a general goal; the smaller goals combine to create an extreme goal so that no department feels abandoned.
The achievement of corporate depends on performance, of each department and each performance is interlinked with each other, so it has to be coordinated

Question 19

Adopting and keeping to a strict ethical code in decision making can be expensive in the short term:

Answer 19

■ Using ethical and Fairtrade suppliers can add to business’s costs.
■ Not taking bribes to secure business contracts can mean failing to secure significant sales.
■ Accepting that it is wrong to fix prices with competitors might lead to lower prices and profits.

Question 20

What do you understand by the corporate objective ‘increasing shareholder value’?

Answer 20

Increasing the value delivered to shareholders because of management’s ability to grow earnings, dividends & share price. In this case, shareholder value is total strategic decisions that will affect the business’s ability to increase the amount of free flow cash in a period of time and dividends paid to them. Priority is given to shareholder’s interest.