Chapter-5 Flashcards
Business objectives and stakeholder objectives
What are objectives, and how should they be set?
Objectives are specific targets to be achieved. They should be SMART.
Why do businesses use SMART objectives, and what do they include?
Businesses use SMART objectives to set clear and effective goals. SMART stands for:
1) Specific – A clear target, e.g., increasing seat occupancy.
2) Measurable – A quantifiable goal, e.g., 85% seat occupancy.
3) Achievable & Agreed – Discussed with relevant departments, e.g., Marketing.
4) Realistic & Relevant – Requires necessary resources and aligns with business needs.
5) Time-specific – Has a deadline, e.g., reaching 85% occupancy in 18 months.
What are the main objectives of businesses?
1) Survival – Essential for new businesses, focusing on staying operational in the early years.
2) Profit – Maximizing the difference between revenue and total costs.
3) Growth – Expanding to benefit from economies of scale, reducing costs, and increasing competitiveness.
4) Market Share – Gaining a larger market presence to strengthen brand image and sales.
5) Corporate Social Responsibility (CSR) – Addressing social, ethical, and environmental concerns to maintain reputation and avoid legal issues.
What is market share?
Market share is the revenue of a business expressed as a percentage of total market revenue.
What is Corporate Social Responsibility (CSR)?
Corporate Social Responsibility (CSR) refers to businesses taking responsibility for the impact their activities might have on society and the environment.
Why has corporate social responsibility (CSR) become an important objective for businesses?
1) Pressure groups influencing business policies.
2) Media raising awareness of social, ethical, and environmental issues.
3) Trade unions and worker representative groups advocating for employees.
4) Government laws at local, national, and international levels.
What is a pressure group?
A pressure group is an organization of like-minded people who put pressure on businesses and government to change their policies to achieve a predetermined objective.
What is a social enterprise?
A social enterprise is a business with social objectives that reinvests most of its profits back into the business or for the benefit of society.
What is a stakeholder?
A stakeholder is an individual or group that has an interest in a business because they are affected by its activities and decisions.
What are the objectives of internal stakeholders in a business?
1) Owners/Shareholders: To receive high returns/dividends and benefit from increased share value.
2) Managers: To have job satisfaction, status, salary increases, and bonuses.
3) Employees: To have job security and receive a fair wage reflecting their contribution to the business’s success.
What are the objectives of external stakeholders in a business?
1) Lenders: To receive interest payments on time and have borrowing repaid on schedule.
2) Suppliers: To receive prompt payment and be treated fairly without pressure to lower prices by businesses with strong buying power.
3) Customers: To receive quality goods, after-sales service, and fair prices that provide value for money.
4) Government: To be paid the correct amount of taxes on time.
5) Local Community: To have minimal unemployment benefits spending, receive benefits like employment, and avoid negative impacts such as pollution.
What are the aims and objectives of public sector organizations?
1) Accessible: Available to everyone, regardless of location or income.
2) Affordable: Cheaper than private sector alternatives, sometimes even free at the point of use.
3) Open to all: Available to all individuals, irrespective of income, class, ethnicity, culture, or religion.
