corporate objectives Flashcards
what are aims
long term goals
what are aims meant to do
maximize shareholder wealth
what is a mission statement
a statement found in annual reports
outlines what a business would like to achieve on a whole
usually non financial
not advertised
what are corporate objectives
smaller objectives
set by managers
usually financial
short term
what are functional objectives
set by department
link into larger aims and objectives
consequences of conflicting objectives
high cost lack of direction low motivation low productivity affect growth
who is the audience for mission statements
society
customers
investors
employees
why is MS important to investors
they need to understand direction of business
want to identify with values because they invest a lot of money
why is MS important o employees
provides them with direction
motivation
why is MS important to customers
encourage customer loyalty
may disagree with views e.g animal testing
why is MS important to society
they experience the effects
don’t often realize it
what makes good MS
clear sense of business purpose
excites, inspires, motivates and guides
easy to understand and remember
differentiates business
what are issues with mission statements
disconnection between what business says and does
e.g improve customer service vs reduce costs
just PR
everyone has to know and understand it but are only expressed in annual report
is it ingrained in culture?
short termism
base decisions on short term outcomes
can be safer/ reduce risk element
long termism
base decisions on long term outcomes
evidence based decision making
requires systematic and rational approach to researching and analyzing all available information before a conclusion is reached
what are 6 stages of EB decision making
- setting/identifying objectives
- gather ideas/data
- making a decision
- implementing the decision
- monitoring and evaluation
benefits of EB decision making
allows business’ to make rational decisions and reduce risk
can prepare for potential outcome
can justify decisions to shareholders
subjective decision making
personal opinion of the key decision maker strongly influence the course of action chosen
benefits of subjective decision making
can create strong direction for business
quickly decided and carried out
key decision maker may be able to make best decision
limitations of subjective decision making
can be biased (focused on financial reward)
no consultancy with employees (demotivation)
may miss out better ideas from others
no evidence to show shareholders
