Business objectives and strategy Flashcards
What is a mission statement?
A statement of the businesses core aims, phrased in a way to motivate employees and to stimulate interest by outside groups
What is a vision statement?
A statement of what the organisation would like to achieve or accomplish in the long term
Pros of mission statements?
- They inform viewers what the central aim of a business is
- Help motivate employees
Cons of mission statements?
- Too vague
- Impossible to analyse or disagree with
What is Corporate social responsibility (CSR)?
A strategy undertaken by companies to not just grow profits, but to take an active and positive social role in the world around them
Pros of a business’ CSR profile to the business and its stakeholders?
- Improves business profitability and value e.g. the introduction of energy efficiencies
- Enhances a businesses reputation for example investors may look for a business with a CSR profile
- Customers are drawn to those businesses that have reputation of being a good corporate citizen
Cons of a business’ CSR profile to the business and its stakeholders?
- CSR costs money to implement
- Conflicts the profit motive
What is a stakeholder?
A stakeholder is defined as somebody or a group of people who have an interest in a business
What are the different types of stakeholders?
- Owners
- Employees
- Government
- Customers
- Suppliers
- Local community
- Competitors
What is a business plan?
A written document that describes a business, its objectives, its strategies, the market it is in and its financial forecasts
What is in a business plan?
- The nature of the business
- The product/service it offers
- Objectives and strategy
- Business’ approach to marketing
- Founders and employees
- Firms operations
- Forecast on future sales
Who needs a business plan?
- Entrepreneurs or anyone trying to set up a business
- Potential investors
What is the purpose of a business plan?
- To secure external funding
- Ensure the firm develops a healthy financial structure
- Help identify problem areas that the business might face
- As a focus to set targets
- Provide realistic expectations
Pros of a business plan?
- Sets out firms visions
- Allows firms to plan ahead and set financial contingencies
- Attract investors
- Allows for identification where external assistance may be needed
Cons of a business plan?
- Time consuming
- Does not account for external factors such as a recession
- Lack of freedom
- Bias
What is a business aim?
Where the business wants to be in the future, its goals. A statement of purpose e.g. “we want to grow the business into europe
What is a business objective?
Business objectives are stated, measurable targets of how to achieve business aims. e.g. “we want to achieve sales of €10 million in European markets in 2021
What is an organisational aim?
Where the business wants to go in the future, its goals. Statement of purpose
What is a Corporate/business objective?
Long term goals of the business e.g. Survival, profit or growth
What are operational objectives?
The medium to long term goals of the functions within a business, helping it achieve its corporate objectives. Businesses will set a range of corporate objectives such as minimising cost and increasing market share
What are strategic objectives?
Long term
What are tactical objectives?
Short term - day to day
What are the general aims of firms in the private sector?
Maximise the profits for shareholders and owners
What are the general aims of the public sector?
To provide services to the community
What are the general aims of the third sector?
To raise money and increase awareness for good causes
Why might a business change its objectives over time?
- A business may achieve it objective quicker than expected and need another one
- The competitive environment might change
- Technology might change product designs
What is contingency planning?
The aim of contingency planning is to minimise the impact of a significant foreseeable event and to plan for how the business will resume normal operations after the event
What are the 3 approaches a business can take to manage risk?
- Risk management
- Contingency planning
- Crisis management
What is risk management?
Identifying and dealing with the risks threatening a business
What is contingency planning?
Planning for unforeseen events
What is crisis management?
Handling potentially dangerous events for a business
What is the 4 step process of contingency planning?
1) Identifying what and how things might go wrong
2) Understand the potential effects if things go wrong
3) Devising plans to cope with threats
4) Putting in place strategies to deal with the risks before they happen
What is risk?
Investing time, money and effort into a new project that may not be successful
What is reward?
The return received from investing in a new project or idea
What is pure risk?
Pure risk is an event beyond someone’s personal control
What is speculative risk?
Carries the possibility of a gain aswell as a loss
What are examples of internal causes of uncertainty?
- Industrial action by employees such as going on strike
- Fire or theft
- Losing good employees to competitors
What are examples of external causes of causes of uncertainty?
- Economic uncertainty such as a recession
- Natural disasters
- New legislation
- Developments in technology
- Social changes such as tastes and fashion
