Unit 1- Topic 1: Business Objectives (✅)

Question 1

What is a business objective?

Answer 1

Business objectives are goals that a business wants to achieve. (Can be short or long term & can change depending on economic conditions).

Question 2

What is a mission statement?

Answer 2

A mission statement is a means of communicating the aim of a business to key stakeholders including employees, customers and management etc. A qualitative statement to motivate employees.

Question 3

Advantages of a mission statement

Answer 3

1. It gives everyone a sense of common purpose so that all actions are focused on one aim.
2. It can act as a motivational tool for employees.
3. It should help a business to differentiate itself.

Question 4

Disadvantages of a mission statement

Answer 4

1. Mission statements are often seen as a marketing ploy rather than meaningful statements of intent.
2. They can often be too vague therefore difficult to measure if a mission has been achieved.
3. Can be expensive and time-consuming.

Question 5

How can survival be a main objective?

Answer 5

Survival is where a business aims to ensure trade in the future. (Used in difficult economic conditions & when incomes are falling making demand weak).

Question 6

How can Profitability be a main objective?

Answer 6

Probs most important business objective and aims to exceed current levels of profitability.

Question 7

How can growth be a main objective?

Answer 7

Means increasing market share etc. It can help secure the future prospects of a business & minimise the chance of business failure.

Question 8

Advantages of survival as a main objective.

Answer 8

1. Enables management to keep business operating into the foreseeable future.
2. Survival may be the best objective in a recession, etc.
3. Shareholders may welcome a cautious approach in difficult times since they have invested money.

Question 9

Disadvantages of survival as a main objective.

Answer 9

1. May cause conflict with shareholders as lack of dividends may result in them selling their shares.
2. Company may become risk adverse and miss out on new opportunities.
3. Leads to cost cutting measures such as redundancies or sourcing cheaper materials resulting in poorer quality & affecting businesses image.

Question 10

Advantages of Profitability as a main objective.

Answer 10

1. Allows maximum reward for their shareholders.
2. Surplus profits can be used to fund future growth & investment.
3. Can help attract investors.

Question 11

Disadvantages of Profitability as a main objective.

Answer 11

1. Redundancies may occur in a bid to maximise profits which affects staff morale due to lack of job security.
2. Quality may suffer to make business more efficient.
3. Can cause conflict with shareholders.

Question 12

Advantages of Growth as a main objective.

Answer 12

1. Can enhance the firm’s competitive position.
2. Can secure future prospects of the business.
3. Leads to economies of scale.
4. May allow firms to eliminate competitors through takeovers and mergers etc.

Question 13

Disadvantages of growth as a main objective.

Answer 13

1. It can fail if it takes place too quickly or if business overstretches itself into uncertain markets.
2. Growth may not be possible in the current economic climate (recession).
3. Growth can lead to diseconomies of scale (workers become demotivated).

Question 14

How can a corporate image be a non-financial main objective for a business

Answer 14

Reputation is important as bad publicity can have a detrimental impact on an organisation.

Question 15

Advantages of Corporate images as a main objective

Answer 15

1. It helps enhance the company’s image which may increase market share.
2. A positive image can attract a higher quality workforce which leads to greater productivity & quality and in turn profitability.
3. Can motivate employees.

Question 16

Disadvantages of corporate image as a main objective

Answer 16

1. There is no guarantee of increased market share.
2. Time consuming and costly using up valuable resources could hurt competitive pricing.
3. Can cause conflict with shareholders. (High costs will affect profits therefore reduced dividends.)

Question 17

How can concern for the environment be a non-financial main objective for a business

Answer 17

Typical objects include reducing water pollution, noise levels, use of energy and increasing levels of recycling in an attempt to achieve a competitive advantage.

Question 18

Advantages of Concern for the environment as the main objective for a business.

Answer 18

1. Caring for the environment will improve the image of business.
2. May help attract high quality employees.
3. Government incentives such as grants reduce initial costs and generate future savings In energy.

Question 19

Disadvantages of Concern for the environment as a main objective for a business.

Answer 19

1. Can be costly
2. No guarantee that it will attract more customers.
3. Takes time and resources away from other more important elements of the business such as product development to draw up an environmental policy.

Question 20

How can employee engagement/Satisfaction be a non-financial main objective for a business.

Answer 20

Employee satisfaction allows you to create a workforce of engaged, loyal employees through increased responsibility, rewarding exceptional work, creating a positive working environment. Promoting teamwork and communicating openly with your employees.

Question 21

Advantages of employee engagement/satisfaction.

Answer 21

1. Employees will be more motivated due to more responsibilities increasing productivity.
2. Increased quality as workers take pride in there work.
3. Will create a positive work environment which leads to better customer service and a better reputation.

Question 22

Disadvantages of employee engagement/satisfaction.

Answer 22

1. This could lead to slower productivity or mistakes being made as employees lack experience.
2. Due to increased communication, it can lead to slower decision making since employees expect a day in decision now
3. Not all employees want extra responsibility which can cause demotivation.

Question 23

How can social responsibility be a non-financial business main objective.

Answer 23

Social responsibility refers to responsible business practices and strong ethics & morals.

Question 24

Advantages of social responsibility as a main business objective.

Answer 24

1. Helps to create a good reputation for the business.
2. Helps attract consumers who want to support the business.
3. Helps those who are disadvantaged
4. Attracts high quality staff.

Question 25

Disadvantages of social responsibility as a main business objective.

Answer 25

1. Costs the business both considerable time and money. 2. Only perceived as a short term objective. 3. Can make shareholders unhappy as it will result in lower dividends (conflict).

Question 26

How can employee welfare be a main business objective.

Answer 26

This relates to issues such as wages and salaries, comfortable and safe working conditions, training and development, pensions etc.

Question 27

Advantages of employee welfare being a main business objective.

Answer 27

1. Makes the business more attractive which helps to recruit staff since employees are more satisfied. 2. It helps retain staff as they feel valued. 3. It helps to motivate workers more meaning increased productivity.

Question 28

Disadvantages of employee welfare being a main business objective.

Answer 28

1. Takes time and employees away from their jobs 2. Investing in employee welfare intiatives such as training and development of staff can prove pointless if an employee leaves the organisation and competitors may gain. 3. Expensive for the business.

Question 29

What are internal factors influencing business objectives?

Answer 29

Products/services, finances, corporate objectives, human resources, marketing issues.

Question 30

What are external factors influencing business objectives?

Answer 30

Technologies and standards, location, economic issues, competitors, legal and environmental change, customer needs, pressure groups.

Question 31

What is a short term objective?

Answer 31

A short-term objective is typically achievable within a period of 1 year (e.g. increases market share by 3%).

Question 32

Advantages of a short term objective.

Answer 32

1. It is short term therefore will work hard to meet this target. 2. Can lead to high motivation as it provides an urgency to work. 3. Much easier to plan for the short term and to implement. Less chance of unexpected events.

Question 33

Disadvantages of a short term objective.

Answer 33

1. Less investment: focusing on short term gains can result in lack of innovation. 2. Short term objectives can easily turn into short term thinking 3. If you focus on meeting objectives in the short term, it could mean projects are rushed and means poorer quality.

Question 34

What are long-term objectives?

Answer 34

Long-term objectives are typically achievable within a 2-5 year period. (e.g. £10 million investment programme in new factory machinery over a 5 year period.

Question 35

Advantages of a long-term objective.

Answer 35

1. Allows a business to anticipate any barriers or problems. 2. It gives the business motivation to remain working towards a certain goal. 3. Helps to establish confidence which is needed if a business is to be successful.

Question 36

Disadvantages of a long-term objective.

Answer 36

1. May become irrelevant due to the external environment. 2. Employees may be demotivated because they will focus on their individual roles in the short term. 3. Long term objectives are difficult to quantify and measure therefore they need to be linked to specific short term goals.