Chapter 6 - Achieving Business Goals Flashcards
Benefits of goals for managers
- serves as targets = decisions are easier to make is one understands what the business is trying to achieve
- measuring sticks = goals act as benchmarks
- motivation = goals represent a challenge or an aim
- commitment = getting am employee to achieve or participate in a goal setting process provides a personal stake in the success of a business
What are some financial goals?
- to maximise profits
- increase market share
- grow/expand
- improve share price
What are some non-financial goals a business might set?
- social goals
- environmental goals
What is profit maximisation?
Occurs when there is a maximum difference between the total revenue (the number of sales made x the price) coming into the business, and total costs being paid out
How can you maximise profits?
- increase sales, as consumers will purchase more
- create innovative products
- deliver better services
- create a well-targeted marketing campaign
What did Virgin Airlines do when they first began operating?
- they initially set very low prices to tempt passengers away from established carriers
- Virgin has a long term goal ‘the desire to maximise profits’, but they understand this will take years to achieve
What is market share
Refers to the business’s share of the total industry sales for a particular product
Why is it important for a business to have a large market share?
- because small market gains often translate into large profits
How do large businesses increase their market share
- develop an extensive product range using many different brand names
- merge/acquire (with) another business
What is promotion
Describes the methods used by a business to inform, persuade and remind a market about its products
Why might some businesses not wish to grow?
- avoid the added pressures of expansion in a desire for a quiet life or a particular lifestyle
- maintain personal contact with the customers
How can a business grow externally?
- merging with another business (e.g. when Qantas merged with Jetset Travel)
- acquiring another business (e.g. when Coca-Cola Amatil purchased Neverfail Springwater and Mount Franklin bottled suppliers)
How can a business undergo internal growth?
- employ more people
- increase sales
- introduce innovative products
What is a share
Part ownership of a public company
Why do people buy shares?
- in the hope of selling them for a higher price
- owning shares in a company entitles an investor to a part of the company’s profits, which is distributed in the form of dividends
How do companies maximise the returns of their shareholders
- achieved by keeping the share price rising, and paying back healthy dividends
What are three main social goals?
- Community service - business sponsorship of wide range of community events, promotions and programmes
- Provision of employment - employing family members
- Social justice - employees and community members treated fairly
How are businesses reaching environment goals?
- sustainable development (e.g. Club Assist, SITA Australia, Johnson and Johnson)
- governments imposing stricture environmental regulations on business practices
How have Club Assist been environmentally friendly?
- they branded batteries are made using recycled lead and plastic
- developed battery recycling programmes designed to maximise collection rates for batteries
Why can it be difficult for businesses to achieve all their financial and non-financial goals simultaneously?
- because links between goals make some incompatible and/or conflict with each other
- e.g. maximising profits CONFLICTS with increasing market share
To be effective, business goals should be S.M.A.R.T.
What does this stand for?
- S pecific
- M easurable
- A chievable
- R ealistic
- T imebound
What is staff involvement
Involving employees in the decision making process and giving the, the necessary skills and rewards
Staff will only be successful if a business provides employees with the necessary expertise as well as recognising the importance of:
- innovation
- motivation
- mentoring
- training
Innovative activities of staff are referred to as…
Intrapreneurship within the business
Tips for motivating staff
- communicate regularly with staff
- make clear expectations
- delegate responsibility
- encourage suggestions
- provide safe working environment
Rewards/Tasks that motivate people (not money incentives)
- provide interesting work which is challenging and rewarding
- train your staff
- offer opportunities for employees to advance
- show respect and courtesy
- listen to your staff to find out what motivates them
Define mentoring
- the process of developing another individual by offering tutoring, coaching and modelling acceptable behaviour
What is socialisation
The process a new employee undergoes in the first few weeks of employment through which he or she learns how to cope and succeed
Why can a formalised mentoring programme be beneficial?
- ensures access to mentors of all employees, regardless of levels of experience, backgrounds, gender or ethnicity
- the participants in the mentoring relationship know what is expected of them
- it assists with training and development of all employees, and passes on skills and abilities
- provides career and physiological support - a friend + counsellor
- increases possibility of skill transfer
What is employee training
Generally refers to the process of teaching staff how to perform their job more efficiently and effectively by boosting their knowledge & skills
Multi-skilled employees are better able to:
- adapt to a rapidly changing technological environment
- provide better customer service
- participate effectively in work teams, leading to innovation
- gain promotion, making their commitment to the business greater
What are the goals of training employees
- improve employee productivity
- develop multi-skilled employees
