chapter 4- business objectives

Question 1

what does SMART stand for

Answer 1

Specific
Measurable 
Achievable
Realistic and relevant
Time specific

Question 2

state the hierarchy of objectives

Answer 2

aim
mission
corporate objectives 
divisional objectives 
departmental objectives 
individual targets

Question 3

define corporate aims

Answer 3

very long term aims that a business hopes to achieve

Question 4

define corporate aims

Answer 4

very long term aims that a business hopes to achieve

Question 5

name 2 benefits to establishing corporate aims

Answer 5

becomes the starting point for the entire set of objectives on which effective management is based, can help develop a sense of purpose and direction for the whole organization if they are clearly communicated to the workforce, provide a framework within which the strategies or plans of the business can be drawn up

Question 6

define mission statement

Answer 6

a statement of the businesses core aims, phrased in a way to motivate employees and to stimulate interest by outside groups

Question 7

what is the purpose of a mission statement

Answer 7

to quickly inform groups outside of the business what the central aim and vision are, can motivate employees

Question 8

name 2 disadvantages associated with mission statements

Answer 8

too vague and general, based on public relations to make stakeholder groups feel good about the organization, virtually impossible to analyse or disagree with, businesses can have similar ones

Question 9

name 4 of the 8 common corporate objectives

Answer 9

profit maximisation, profit satisfying, growth, increasing market share, survival, corporate social responsibility, maximizing short term sales revenue, maximizing shareholder value

Question 10

give a scenario where profit satisfying would be used

Answer 10

a small business owner who wishes to live comfortably but doesn’t want to work longer hours to increase profit so they can create a work life balance

Question 11

give a limitation to having growth as a corporate aim

Answer 11

rapid expansion can lead to cash flow problems, large businesses can experience diseconomies of scale, sales growth could be achieve but profit margins could be lower, increased profit can decrease earnings

Question 12

give 1 benefit of having a higher market share

Answer 12

retailers will be keen to stock and promote the best selling brand, profit margins offered to retailers may be lower than competitors so shops are keen to stock, effective promotional campaigns are often based on buy our product in confidence as it is the brand leader

Question 13

define corporate social responsibility

Answer 13

this concept applies to those businesses that consider the interests of society by taking responsibility for the impact of their decisions and activities on customers, employees,, communities and the environment

Question 13

define corporate social responsibility

Answer 13

this concept applies to those businesses that consider the interests of society by taking responsibility for the impact of their decisions and activities on customers, employees,, communities and the environment

Question 14

what are the 7 stages in the decision making framework

Answer 14

1 set objectives
2 assess the problem or situation
3 gather data about the problem and possible solutions
4 consider all the decision options
5 make the strategic decision
6 plan and implement the decision
7 review its success against the original objectives

Question 15

give 2 examples on how corporate objectives might change

Answer 15

a newly formed business may have satisfied the survival objective and now they want to increase profit or grow, the competitive and economic environment may change, the short term objective of growth in sales or market share may be adapted for a longer term objective

Question 16

give 2 factors that determine the corporate objectives of a business

Answer 16

corporate culture, the size and legal form of the business, public or private sector business, number of years the business has been operating, divisional, departmental and individual objectives

Question 17

define management by objectives

Answer 17

a method of coordinating and motivating all staff in an organization by dividing its overall aim into specific targets for each department, manager and employee

Question 18

give 3 advantages of when employees are well communicated with

Answer 18

employees and managers achieve more through understanding individual and company goals, employees see and understand the overall plan, creating shared employee responsibility, managers more easily staying in touch with employee process and can immediately reinforce them to keep work on track and up to standards

Question 19

define ethical code of conduct

Answer 19

a document detailing a company’s rules and guidelines on staff behavior that must be followed by all employees

Question 20

name 2 ways acting ethically could negatively impact a business

Answer 20

fair-trade suppliers increases a businesses costs, not taking bribes can lead to a failure to secure certain sales, limiting unethical advertising can decrease sales, paying fair wages decreases business profit

Question 21

name 2 benefits for businesses who act ethically

Answer 21

can avoid expensive court cases, can avoid bad publicity if they were caught acting unethically, ethical businesses attract ethical customers, well qualified staff can be attracted to ethical businesses