Objectives Flashcards
What objectives do businesses set?
- make a profit
- survival (being able to stay in business- breaking even)
- customer satisfaction
- protect the environment
- be the market leader
- provide a public service
- help a cause
- managerial objectives
- growth
- corporate social responsibility
Satisfying
This means to achieve a performance which is just enough to keep stakeholders satisfied.
Eg just enough profits to keep shareholders happy so they do not decide to sell their shares
This objective may be set during difficult times for the business. Eg when under threat from external factors.
Managerial objectives
Businesses are run by managers and sometimes they will pursue objectives in their own interest rather than the interest of the shareholder
Eg managers’ bonuses are often based on the amount of sales made, instead of the amount of profit
This can lead to short term actions to increase sales such as price cuts, which can actually harm profits.
Corporate social responsibility (CSR )
Meeting the needs of a range of stakeholders
CSR look at:
- business ethics
- social responsibility
- corporate responsibility
- legislation
- environmental and green issues
CSR examines the welfare of society and various stakeholders working towards improvements
Reasons for growth
- higher revenue and profits
- become well known ie brand awareness
- more customer/ bigger customer base/ higher market share
- become market leader-power to set prices
- less risk of takeover
- economies of scale: reduction in unit costs due to the size of the business, cheaper cost per unit produced–> set a lower selling price–> attract customers–> bigger market share/revenue/profits
How do you meet the needs of staff?
- reduce gender pay gap
- pay staff fairly (good pay)
- safe working environment
- staff benefits
- fair treatments
- other opportunities
- training
How do you meet the needs of customers?
- make products healthier
- reduce packaging
- provide nutritional information
- ethical sourcing
How do you meets the needs of the environment?
- use recyclable materials in their packaging
- renewable energy
- reduce carbon footprint
- use sustainable ingredients
- local sourcing
- green energy
How do you meet the needs of the supplier?
- fair pay
- enrich communities which provide their ingredients
- secure contracts
- fair treatments
- no exploitation
What are some disadvantages of CSR
Disadvantages
- cost money to enforce new policies
- higher expenses eg pay
- time and cost of training therefore loss of working time
- increase in cost of production resulting in increased prices therefore less sales.
Justify CSR
- business gets a good reputation for its caring nature
- customer who agree it’s the aim are likely to use the business therefore increase market share/customer base
- the business can attract high quality staff who believe in the ethics of the business therefore staff loyalty.
- society and environment are kept in good order which will benefit business in long run.
- lower costs by reducing packaging
What are some examples of CSR policies?
- protecting the environment EG. Recycling, disposing chemical substances appropriately.
- protecting people EG. support diversity and inclusion, not risking the health and safety of employees and the community.
- human rights
- embrace fair trade to improve labour policies which could attract more customers as they’re likely to agree in these aims.
- engage in charitable giving which could give the business a good reputation for its caring nature.
- reduce carbon footprint which attract high quality staff
- offer career developments to staff which could increase motivation.
