Business Objectives

Question 1

Mission statement : definition

Answer 1

A brief statement which describes the overall purpose of an organisation and defines its existing scope and boundaries so that it can remain focused. It states why a firm exists.

Question 2

Purpose of mission statement :

Answer 2

• Set out purpose of business
• document main aims of business
• communicate to stakeholders
• motivate employees
• attract customers

Question 3

Benefits of mission statement :

Answer 3

• assist management to focus aims
• enables management teams to develop long term plans
• management can communicate the short term goals
• motivates staff
• attracts publicity for the business in positive manner

Question 4

Drawbacks of mission statements :

Answer 4

• mission statement may not relate the mission statement to actual decision making process or business purpose
• stakeholder groups unable to distinguish between purpose and aims
• negative publicity if fail to achieve goals stated
• May state false aims ie environmental whereas it is more profit maximising

Question 5

Corporate aims : definition

Answer 5

Long term goals of company. Objectives are set out to achieve corporate aims.

Question 6

Objectives must be : SMART

Answer 6

Specific
Measurable 
Attainable
Realistic 
Time specific

Question 7

Objectives : survival

Answer 7

New starts : faced with decisions regarding the success of initial startup and survive the early stages of trading.
Existing business : may encounter a downturn in economic performance many factors.
Takeover :

Question 8

Objectives : profit maximisation

Answer 8

When a business reaches a maximum available profit since total costs have been minimised. Hard to achieve. More realistic to aim to achieve a satisfactory level of profit.

Question 9

Objectives : growth

Answer 9

Most common objective. Measured in terms of sales quantities, revenues, profit levels or market share. Achievement of growth can secure the future of the business and enhance their competitive position or minimise chance of business failure.

Question 10

Objectives: social responsibility

Answer 10

Refers to practices of firm. High levels of social responsibility will prove to be an asset to the community and society where it’s based. Requires responsible business practices, decisions and ethical and moral decisions. Could mean that profit maximisation cannot be achieved.

Question 11

Objectives : employee welfare

Answer 11

Relates to issues such as wages and salaries, comfortable and safe working conditions, training and development, pensions etc. The value of a business is dependant on attracting and maintaining high quality employees. However, this can be costly and sometimes the the training received can be used to apply to other jobs with competitors.

Question 12

Objectives : corporate image

Answer 12

A good corporate image can generate interest from potential customers and help keep existing customers. Bad publicity can