Unit 1.3 business objectives Flashcards
objectives
Objectives are the goals or targets an organization strives to achieve.
They are generally specific and quantifiable and are set in line with the organization’s mission statement.
The nature of objectives are:
-Vision
-Mission
-Strategies
-Tactics
Vision statment
This is an outline of an organization’s aspirations in the distant future.
Vision statements focus on the very long-term.
They are expressed as a broad view of where the company wants to be.
Mission statements
This is a simple declaration of:
the underlying purpose of an organization’s existence.
its core values.
Mission statements focus on the medium to long-term.
A well-written mission statement is clearly defined and realistically achievable.
Common business objectives:
Growth
Profit
Protecting shareholder value
Ethical objectives
Objectives are important for three reasons:
To measure and control
To motivate
To direct
Growth
This is usually measured by an increase in its sales revenue or by market share.
Growth is essential for survival in order to adapt to ever-changing and competitive business conditions.
Failure to grow may result in declining competitiveness and threaten the firm’s sustainability
Profitability
Profit maximization is traditionally the main business objective of most private sector businesses.
It provides an incentive for entrepreneurs to take risks in setting up and running a business.
Protecting shareholder value
This objective is about earning a profitable return for shareholders in a sustainable way.
A challenge for the directors of a firm is to balance short-term profits (in the form of dividends) with an investment in the long-term value of the company.
Ethical objectives
Ethics are the moral* principles that guide decision-making and strategy.
*Morals are concerned with what is considered to be right or wrong, from the point of view of society.
Therefore, business ethics are the actions of people and organizations that are considered to be morally correct.
Advantages of Ethical business practices
Improved corporate image
Increased customer loyalty
Cost-cutting
Improved staff morale and motivation
DisAdvantages of Ethical business practices
Compliance costs
Lower profits
Stakeholder conflict
The subjective nature of business ethics
Strategies
Strategies are plans of action to achieve the objectives of an organization.
They are:
medium to long-term goals.
expressed specifically.
Fulfilment of strategies will allow an organization to reach its objectives.
Examples of strategic objectives
-Market standing:
This refers to the extent to which a business has presence in the industry.
-Image and reputation:
This stems from consumer beliefs and perceptions of a firm.
-Market share:
This is measured by expressing the firm’s sales revenue as a percentage of the industry’s total sales.
Tactics
Tactics are the methods used to enact strategies of an organization.
They are short-term and frequently generated in order to enact strategies.
Fulfilment of tactics will allow an organization to perform its strategies.
Relationships between objectives
Vision
The ideal situation of the business in the distant future.
Mission
The purpose and values from the mission will shape employee behaviour to turn vision into reality.
Strategies
Strategic plans fulfil the purpose stated in the mission statement.
Tactics
Tactical actions add up to forming strategic approaches.
Corporate social responsibility
Corporate social responsibility (CSR) is the conscientious consideration of ethical and environmental practice related to business activity.
CSR policies and practices need regular review in order to adapt to evolving attitudes and expectations of different markets/countries.
CSR practices can provide firms with competitive advantages and long-term sustainability.
distinguish betweentactical objectivesandstrategic objectives
Atactical objectiveis a short-term target that is in line with the organization’s long-term goals. Typically,tacticalobjectives have a pre-determined time frame of less than a year. An example of such an objective is to improve staff productivity at WSO by using non-financial methods such as praise to motivate staff.
In contrast, astrategic objectiveis a long-term goal used to achieve the overall strategic goal or aim of a business. For example, a strategic objective might be to improve the market share of WSO by expanding its pathways on offer. This will take a longer time to achieve than tactical objectives.
business ethics
the actions of the organizations that are considered to be morally correct to employ
ethical code of practice ande upload their annual reports
survival
If a business does not survive, it cannot generate revenue, serve customers, or achieve long-term success. Therefore, survival is the fundamental foundation upon which all other business objectives are built.
sales revenue maximization
it directly impacts a company’s profitability and growth potential. Higher sales revenue allows a company to cover its costs, invest in research and development, expand its operations, and generate profits for shareholders.
market standing
the extent that a business has presence in the industry
image and reputation
they impact customer trust and market competitiveness.
market share
it indicates how much of the market a company captures, influencing its competitiveness, revenue, and overall success. it reflects a company’s competitive strength and growth potential in its industry.
