Business Objectives And Strategy Flashcards
Distinguish between organisational aims, corporate / business objectives, strategic objectives, tactical objectives and operational objectives
Organisational aims- long-term goals defining the purpose of a business e.g. To be the leading provider of sustainable energy.
Corporate /business objectives-medium term goals supporting overall aims e.g. Increase market share by 10% in five years.
Strategic objectives -high-level objectives for longtime success e.g. Expand into European markets.
Tactical objectives- short-term goals to support strategy e.g. Launch three new products this year.
Operational objectives-day-to-day objectives for efficiency e.g. Reduce production waste by 5% in six months.
Explain the importance of setting SMART objectives to a business and its stakeholders
SMART objectives ensure clarity and feasibility:
• Specific – Clearly defined.
• Measurable – Can track progress.
• Achievable – Realistic and attainable.
• Relevant – Aligns with business strategy.
• Time-bound – Has a deadline.
Importance to Stakeholders:
• Employees understand expectations.
• Investors see clear growth plans.
• Customers benefit from improved services.
Explain what is meant by the hierarchy of objectives
A structured approach where objectives at different levels align:
1. Corporate Aims – Broad mission statement (e.g., “Improve sustainability”).
2. Corporate Objectives – Medium-term goals (e.g., “Reduce carbon emissions by 20% in 5 years”).
3. Strategic Objectives – Key business growth plans.
4. Tactical Objectives – Departmental goals.
5. Operational Objectives – Day-to-day targets.
Evaluate the impact and importance of setting aims and objectives
Positive:
• Provides clear direction and motivation.
• Helps measure business performance.
• Aligns stakeholder interests.
Negative:
• Unrealistic objectives can demotivate staff.
• Conflicting objectives may cause disputes.
• External factors (e.g., economic downturns) may disrupt targets
Explain how the sector in which a business operates affects its aims and objectives
Private sector-profit maximisation, market growth
Public sector -service provision, cost efficiency
Third sector -social impact, fundraising growth
Industry type -retail focuses on customer satisfaction while manufacturing may prioritise efficiency
Explain how objectives can be communicated
Methods:
• Internal meetings and reports.
• Employee training and goal-setting.
• Investor presentations and press releases.
• Customer and supplier briefings.
Evaluate the consequences of mis-communicating objectives to a business and its stakeholders
Potential Issues:
• Employees misunderstand priorities, leading to inefficiency.
• Stakeholders lose trust in the business.
• Poor investor confidence can impact funding.
• Customers may receive inconsistent service.
Examples:
• If a company fails to communicate sustainability goals clearly, employees may not prioritise eco-friendly practices.
Evaluate ways in which the objectives of a business could be better communicated
Method
Use clear concise language-to avoid confusion
Regularly updates and feedback loops- ensures alignment
Align individuals targets with business goals- employees understand their role
Use virtual aids- help track progress
.Explain why the objectives of a business may need to change
Key Factors:
• Market shifts (e.g., economic downturns).
• New competition.
• Technological advancements.
• Legal and regulatory changes.
• Internal business performance.
Example: A retail company may shift from in-store sales to e-commerce due to changing consumer habits.
Recommend and justify the aims and objectives for a business and how any changes may be implemented
Steps for Change:
1. Assess current performance – Identify areas for improvement.
2. Set new SMART objectives – Ensure feasibility.
3. Communicate changes clearly – Use meetings, emails, and reports.
4. Monitor progress – Adjust strategies if needed.
Example:
If a business struggles with declining sales, a new objective could be:
“Increase online sales by 15% in the next 12 months through improved digital marketing.”
Analyse the objectives of the stakeholders of a business
Owners/Shareholders-Maximise profits and dividends= Want a high return on investment.
Employees-Job security, fair wages, good working conditions= Depend on the business for income and career growth.
Customers-High-quality, affordable products/services=Want value for money and reliable service.
Suppliers= Reliable orders, timely payments=Need long-term partnerships and financial stability.
Government-Compliance, tax revenue, employment growth=Ensures the business operates legally and contributes to the economy.
Local community-Environmental responsibility, job creation=Concerned about pollution, traffic, and local employment opportunities.
Competitors-Market stability, fair competition=Want to operate in a fair and regulated business environment.
Explain the reasons for conflicts between different stakeholder groups
Shareholders vs. Employees=Shareholders may want cost-cutting to increase profits, while employees seek higher wages.
Customers vs. Shareholders=Customers demand lower prices, but reducing prices can lower profit margins.
Suppliers vs. Business=Businesses may want to negotiate lower prices, but suppliers want higher prices for sustainability.
Government vs. Business=Governments may introduce regulations (e.g., higher taxes, environmental laws), which businesses may see as costly.
Local Community vs. Business =A business may expand, increasing traffic and pollution, while the community values sustainability.
Explain why a business needs to manage the conflicting objectives of its stakeholders
If conflicts are not managed properly, the business could face:
• Reduced employee morale – Low wages or job insecurity can lead to lower productivity.
• Customer dissatisfaction – If businesses increase prices to maximise profit, customers may switch to competitors.
• Damaged reputation – Ethical concerns (e.g., poor working conditions) can lead to public backlash.
• Legal penalties – Failing to comply with government regulations can result in fines.
• Supply chain issues – If suppliers are unhappy, they may delay shipments or increase costs.
By managing conflicts, businesses can:
✔ Maintain good stakeholder relationships.
✔ Balance profitability with sustainability.
✔ Enhance long-term growth and stability.
Evaluate the impact on a business of different stakeholders having conflicting objectives
Innovation and Improvement-+Pressure from stakeholders can push businesses to innovate and improve products. -Too many conflicting demands can slow down decision-making.
Reputation Management-+Addressing stakeholder concerns can enhance brand image.-Ignoring concerns (e.g., environmental impact) can lead to public backlash.
Financial Performance-+Finding a balance can ensure sustainable profitability.-Conflict may increase costs (e.g., higher wages, supplier demands).
Employee Motivation-+Satisfied employees lead to higher productivity.-Frequent disputes may cause stress and resignations.
Overall Evaluation:
• Businesses that effectively manage conflicts can turn them into opportunities for growth.
• However, unresolved conflicts can damage performance and stakeholder trust
Recommend and justify how a business should deal with the conflicting objectives of stakeholders
Negotiation and Compromise=Finding a middle ground ensures no stakeholder feels ignored.
Corporate Social Responsibility (CSR) =Ethical practices (e.g., fair wages, eco-friendly initiatives) satisfy multiple stakeholders.
Stakeholder Engagement=Holding regular meetings and discussions prevents misunderstandings.
Transparency and Communication=Open discussions help manage expectations and build trust.
Legal Compliance=Ensures that business operations meet government and regulatory standards.
Example Strategy in Action:
A business facing a conflict between employees and shareholders could:
• Introduce profit-sharing schemes, so employees benefit from company success.
• Increase efficiency rather than cutting wages, satisfying both stakeholders.
• Maintain transparent communication to build trust.
Evaluate the influence different stakeholders have on a business including its aims and objectives, decision making, behaviour and performance
Stakeholders—internal and external—significantly impact a business in terms of its aims and objectives, decision-making, behaviour, and overall performance. The level of influence depends on the stakeholder’s power, interest, and relationship with the business.
Influence of Stakeholders on Aims and Objectives
Different stakeholders have varying priorities, which can shape the direction of a business.
Stakeholder and the Influence on Aims and Objectives
Shareholders -Push for profit maximisation, expansion, and increased dividends.
Employees-Advocate for job security, better working conditions, and career growth.
Customers-Demand quality products, fair pricing, and ethical business practices.
Suppliers-Expect fair contracts, timely payments, and long-term partnerships.
Government-Enforce legal compliance, taxation, and industry regulations.
Local Community-Push for corporate social responsibility (CSR) and environmental protection.
- Influence of Stakeholders on Decision Making
Stakeholders shape strategic, tactical, and operational decisions based on their power and interests
Shareholders -Can vote on key decisions like mergers, acquisitions, or leadership changes.
Employees-May impact HR policies and working conditions through trade unions.
Customers-Their preferences shape product innovation, pricing, and marketing strategies.
Suppliers-Can influence production schedules through pricing and supply chain reliability.
Government-Enforces compliance through regulations (e.g., minimum wage laws). - Influence of Stakeholders on Business Behaviour
Stakeholder expectations influence a company’s ethical standards, corporate culture, and public image.
Employees=A demand for work-life balance may push businesses to offer flexible hours.
Customers=Ethical concerns may lead companies to adopt fair trade sourcing.
Government=Anti-discrimination laws enforce equal employment practices.
Media/Public=Negative publicity can force businesses to revise controversial policies - Influence of Stakeholders on Business Performance
Stakeholders directly impact financial and operational performance.
Employees=Higher engagement leads to better productivity and lower turnover.
Customers=Brand loyalty and repeat purchases drive revenue growth.
Shareholders= Investment decisions impact financial stability and expansion potential.
Suppliers=Reliable suppliers improve efficiency, while supply chain issues can cause delays.
Final Evaluation: How Businesses Balance Stakeholder Influence
• Businesses must prioritise key stakeholders while maintaining long-term sustainability.
• Conflicting interests require compromise (e.g., balancing profit maximisation with employee well-being).
• Transparency and engagement with stakeholders can turn conflicts into strategic advantages.
Evaluate the impact of business decisions on different stakeholder groups
Business decisions can significantly impact different stakeholder groups in various ways. These decisions may benefit some stakeholders while negatively affecting others, creating conflicts of interest that businesses must manage effectively.
Increasing Prices=Positive: Shareholders benefit from higher profit margins. Negative: Customers may feel dissatisfied and switch to competitors.
Cost-Cutting (e.g., Job Reductions, Outsourcing)=Positive: Reduces expenses, increasing profitability for shareholders. Negative: Employees face job losses, and local communities may suffer economic decline.
Expansion into New Markets=Positive: Creates new jobs, increases revenue, and enhances shareholder value. Negative: Employees in the home country may face job insecurity, and cultural/language differences may create challenges.
Implementing Sustainability Policies Positive: Improves brand reputation, satisfies regulatory requirements, and benefits the local community. Negative: Increases short-term costs, potentially reducing shareholder profits.
Mergers and Acquisitions Positive: Increases market share and financial strength. Negative: Employees may lose jobs due to restructuring, and customers may experience higher prices due to reduced competition.
Explain the nature and purpose of a mission statement
A mission statement is a brief declaration that defines a business’s purpose, values, and core objectives. It outlines what the business stands for, its overall direction, and what it aims to achieve.
Purpose of a Mission Statement:
• Provides Direction: Guides strategic decision-making.
• Motivates Employees: Aligns staff with business goals.
• Influences Branding: Helps build a strong company image.
• Attracts Stakeholders: Encourages investment, customer loyalty, and partnerships.
Example: Google’s mission statement: “To organize the world’s information and make it universally accessible and useful.”
Recommend and justify a suitable mission statement for a business
When creating a mission statement, it should be:
• Clear & Concise – Easy to understand.
• Customer-Centric – Focused on delivering value.
• Reflect Business Values – Shows ethical and strategic priorities.
Example: A Sustainable Clothing Brand
Recommended Mission Statement:
“To create stylish, sustainable fashion while protecting the planet and empowering communities.”
Justification:
• Emphasises sustainability, which attracts eco-conscious customers.
• Focuses on fashion and style, reinforcing the brand’s product offering.
• Highlights social impact, appealing to ethical investors.
