chapter 4- business objectives Flashcards
what does SMART stand for
Specific Measurable Achievable Realistic and relevant Time specific
state the hierarchy of objectives
aim mission corporate objectives divisional objectives departmental objectives individual targets
define corporate aims
very long term aims that a business hopes to achieve
define corporate aims
very long term aims that a business hopes to achieve
name 2 benefits to establishing corporate aims
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
define 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 the purpose of a mission statement
to quickly inform groups outside of the business what the central aim and vision are, can motivate employees
name 2 disadvantages associated with mission statements
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
name 4 of the 8 common corporate objectives
profit maximisation, profit satisfying, growth, increasing market share, survival, corporate social responsibility, maximizing short term sales revenue, maximizing shareholder value
give a scenario where profit satisfying would be used
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
give a limitation to having growth as a corporate aim
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
give 1 benefit of having a higher market share
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
define corporate social responsibility
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
define corporate social responsibility
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
what are the 7 stages in the decision making framework
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
give 2 examples on how corporate objectives might change
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
give 2 factors that determine the corporate objectives of a business
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
define management by objectives
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
give 3 advantages of when employees are well communicated with
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
define ethical code of conduct
a document detailing a company’s rules and guidelines on staff behavior that must be followed by all employees
name 2 ways acting ethically could negatively impact a business
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
name 2 benefits for businesses who act ethically
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
