C5 Aims and Objectives

Question 1

Vision statement

Answer 1

A vision statement is a description of what a business sets out to achieve in the medium to long term.

Question 2

Benefits of having a vision statement

Answer 2

• A clear vision can give the business a clear identity and ethos
• Can help in setting objectives and support the business strategy
• Focus senior managers on the tasks set to achieve the vision
• Communicates to employees how they can contribute and can improve employee engagement
• Commits resources to achieving the vision

Question 3

Trees for the future vision statement

Answer 3

“Plant trees. Change lives.”

Question 4

Mission Statement

Answer 4

An organisation’s mission statement is a broad statement of its aims and values. It will guide the everyday operations and decision making of the business.

Question 5

Starbucks mission statement

Answer 5

To inspire and nurture the human spirit - one person, one cup, and one neighbourhood at a time

Question 6

Reasons for having a mission statement

Answer 6

• Helps to ensure all stakeholders are clear on the purpose of the business.
• Helps with strategic planning since this should be the starting point
• Gives some transparency for investors - they understand how their capital will be put to use
• Helps customers understand the ethics and objectives of a company

Question 7

Business aims

Answer 7

Business aims are what the business want to achieve in the future and tend to be quite generic and broad.
They set out the goals for the business

Question 8

Business Objectives

Answer 8

Business objectives are specific and measurable targets the business will set in order to achieve their aims.

Question 9

Business aims and objectives can be grouped into the following categories:

Answer 9

• Survival
• Profit maximisation
• Sales maximisation
• Growth
• Increase shareholder value
• Corporate/environmental/ethical responsibility

Question 10

Survival (aims and objectives)

Answer 10

Around 30% of businesses fail within two years of being set up and in some industries this is much higher. The initial objective is to survive the difficult time of gaining customers, establishing a good local name, and building a reputation.

Question 11

Profit maximisation (aims and objectives)

Answer 11

The objectives in most businesses, especially those operating in the private sector, is to maximise profits.
When examining profits, a business will need to make comparisons against rival businesses and historical profit figures.
Long term increases in profitability will be the main factors that create on going motivation in business owners and managers.

Question 12

Growth and gaining market share (aims and objectives)

Answer 12

Some businesses will spend money to gain profits, reducing profits in the short run, but hopefully increasing profits in the longer term.

Question 13

Increasing shareholder value (aims and objectives)

Answer 13

This is measured by the amount of dividend paid to shareholders and any increase in share price. This objective is concerned with increasing the price of the business’ shares on the stock market

Question 14

Corporate social / Environmental / Ethical responsibility (aims and objectives)

Answer 14

There are businesses that will try to minimise the impact of their business activities on the environmental and consider the needs of society. This objective may come at the cost of lower profits for the business.