business objectives and strategy Flashcards
what are internal stakeholders
are found within the business and are the owners and employees, including managers.
what are external stakeholders
are suppliers, leaders, customer, and the local community.
what will owner objectives be
best possible return on the money they have invested in the business.
want to see the business grow so that these returns increase.
long term- a high rate of return
short term- growth via low prices
capture more of the market
loyal customers
what will employee objectives be
highest wage possible
bonus
job security
more legal entitlement to holidays, sick pay
want managers organise work as interesting and challenging
many want to have training course to improve skills and pay and promotion
what will customer objectives be
best quality products at lowest possible price.
want product innovation- each year product better than last
good customer service
what will supplier objectives be
want to see clients prosper so can have regular profits
wants customers to grow so their sales increase
what will lenders objectives be
agreed amount owed to it to be paid at the agreed time.
don’t want to receive less than expected.
want correct amount at correct date.
what are the benefits to the community of businesses moving into the area
Property prices may fall. None of these is a cost to the firm but will be paid (imposed) on the community.
jobs
what will government objectives be
they want more people employed, so government has to pay out less social security benefits and recieve increased tax revenue
also larger business exports- helps improve trading position
what is the hierarchy of objectives and strategies
mission statement
aims & goals
strategic objectives
tactical objective
what is a mission statement
general idea of what the business exists to do, and its purpose is to set this down for the benefit of all stakeholders.
are aims/ goals more specific than a mission statement
yes
what are the aims & goals of a business
survival-
breaking even
share of the market/ growth- depends on type of business and market it operates. increases sales and puts business is market domination position
profit- long term goal for survival. ability to make profit depends on products/ services offered and amount of market competition
what does setting objectives provide to a business
- A greater sense of direction for the business.
- A possible motivational force for all employees.
- An aid to controlling existing and future operations in the business
what are examples of strategic objectives
- Increase productivity within the business in order to reduce costs and thereby increase sales via lower prices.
- Sell its products in new market.
what are strategic objectives
How a business plans to achieve its aims or goals, after a long- term approach.
what are tactical objectives
The day- to day (short term) objectives needed to ensure the strategic objectives are achieved.
what are strategies
action plans to meet objectives
what are tactics
steps to meet strategies
example of tactical objectives
business may want to advertise and merchandise its products in chosen area within six months.
It may also decide that the best way to achieving the strategic objectives is to reduce its prices in these new markets.
what do SMART objectives stand for
specific
measurable
agreed
realistic
timed
what does specific objectives mean
is important to that everyone understands what the target is.
what does measurable objectives mean
the objective statement should contain a type of measurement to ensure that success or failure can be ascertained.
what does agreed objectives mean
Agreement between different departments makes it more likely that objectives will be achieved.
To be successful all departments need to work together in setting objectives.
what does realistic objectives mean
realistic when setting objectives, in order to avoid employees becoming demotivated.
what is time objectives mean
a timetable specifying the period over which an objective is to be achieved.
A time constraint aids measurement and tends to focus people’s minds.
what are internal constraints on objectives
- A lack of finance to meet the chosen objectives.
- Poor communication within the business.
- A conflict of interests between departments within the business.
- An industrial dispute with the workforce.
what are external constraints on objectives
- Changes in the law that affect the operation of the business.
- The state of the economy.
- The behaviour of competitors.
- The opinions and behaviour of external stakeholders.
what are corporate objectives
- They give a sense of direction to the business and help to define the culture in which the business is organised and operates.
- The corporate culture of the business is clearly linked to its corporate objectives
what are social objectives
social conscience is seen by many as an effective marketing tool.
Waste and its reduction are a good example of how businesses have realised that demonstrating social conscience can also have significant amounts of money
what are changing objectives
circumstances change, businesses may need to adapt their objectives.
depending on priorities and circumstances, in order to achieve both the implementation of the strategic plan and the firms’ main goals.
communications and objectives
that they communicate their objectives clearly to all stakeholders and that they adhere to their objectives.
* Miscommunication about objectives can have serious results; if employees feel that growth is going to be achieved at the cost of jobs, with workers replaced by capital equipment, this can result in serious unrest.
what is corporate social responsibility
the responsibility of the firm to act in the best interests of the people and communities affected by its activities.
what are the different areas that corporate social responsibility covers
environment and ethics
charity and fundraising
diversity
financial responsibility.
what type of tools are used with planning
decision trees, critical path analysis, and investment appraisal.
how can a business successfully plan for the future
ensure that the objectives set for the future of the business fit with planning.
consider new products, changes in their markets, cashflow and investment decisions in order to remain competitive.
Managers may need to take risks in order to maintain or increase profits
effective planning will help to minimise these risks and ensure that the business knows clearly what its future course of action will
what is an objective
set by a business is an attempt to reach a particular goal.
The main business objectives are survival, break even, profitability and expansion.
what is a strategy
the action plan that the business puts in place to reach its objectives.
E.g marketing to increase customer awareness of the local area.
what is a tactic
particular step that a business takes to achieve its strategy.
what needs to happen to develop a strategic plan
necessary to collect information on many aspects of the business.
This will involve an internal and external audit of the business, which should be executed on a regular basis.
what is an internal audit
looks at the strengths and weaknesses of the business.
what is an external audit
looks at the opportunities and threats in the trading environment of the business.
what is the purpose of internal audit
provide accurate information about each particular department; therefore, it is best to use accounting or strategical data wherever this is possible.
In each case the business should compare itself with its major competitors to see where it has strengths and weaknesses.
what is the purpose of external audit
looks at the opportunities open to the business and the threats which it faces in its external environment.
All businesses operate in a constantly changing environment.
what is an acronym for factors involved in external audit
PEST
what does PEST Stand for
- Political
- Economic
- Social
- Technological factors
what is the political factor of PEST
actions of government can have a major impact on the way in which a business operates.
e.g health and safety laws
what is the economic factor of PEST
economic policy- key areas of concern for all businesses- have an impact on consumer demand.
Inflation, interest rates, the value of the currency, unemployment and the economic cycle will play their part in influencing the success of the business
what is the social factor of PEST
The characteristics of the population
Changes in the distribution or spending habits of consumers are constantly changing, making it vital that businesses act accordingly.
what is the technological factor of PEST
Changes in technology offer businesses new opportunities, but also create new risks.
recognise situations where existing processes and machinery have become obsolete.
what is the competition factor of PEST
extent of the competition and the threat which it poses will have a considerable impact on the success of the business.
It may be necessary to change the price or product range in response to competition.
what is the culture factor of PEST
Businesses need to take account of the characteristics of the local population and their shopping habits.
what is the ethics factor of PEST
Businesses must be aware of the demand for ethical trading and its effects on customer demand.
what is the pressure group factor of PEST
can exert pressure on businesses.
what is the environment factor of PEST
The high price of domestic fuel and an increase in awareness of global warming have led to a rapid rise in the demand for low energy light bulbs and a consequent fall in price.
what is SWOT analysis
only gives analysis one gives part of the picture, and it should be viewed alongside information such as market research, ratio analysis and other financial data, sales figures and government economic statistics.
for a business considering growth which tool could be useful alongside SWOT analysis
Ansoff’s matrix as helps business consider best direction for changes to achieve growth.
what can strategic objectives be useful for
creating a framework to analyse operations of business. also used to analyse setting of a business objectives and the strategy it develops to reach them
what is some necessary information about stakeholder objectives
in theory, all stakeholders will benefit from a business’s success, but in reality, they may not.
even if all stakeholders do benefit, they may not do so equally, there is potential conflict.
why do stakeholder objectives have to be addressed by a business
Employees who feel valued will be more productive, be less resistant to change and less likely to leave.
Customers who do not feel exploited and like the standard of products and services will generate repeat custom.
Suppliers who are treated as true stakeholders rather than ‘suppliers’ are more likely to be loyal and committed as they have a ‘stake’ in the business.
Owners will want a return that they feel is satisfactory. if business is a company, investors will want dividend in business that investors in similar business receive.
the local community-while not a single coherent entity, could generate negative publicity for a business if it creates social costs such as pollution or congestion.
