1.3 Business Objectives Flashcards
(19 cards)
Vision:
An outline of an organization’s aspirations in the distant future.
Vision statements focus on very long-term.
They are expressed as a broad view of where the company wants to be.
Objectives and their importance to a firm:
Generally specific and quantifiable and are set in line with the organization’s mission statement.
Important for 3 reasons:
To measure and control
To motivate
To direct
Mission statements:
This is a simple declaration of the underlying purpose of an organization’s existence.
With core values.
Focus on the medium to long-term.
Clearly defined and realistically achievable.
Growth:
Usually measured by an increase in its sales revenue or by market share.
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:
Provides an incentive for entrepreneurs to take risks in setting up and running a business.
Protecting shareholder value:
Earning a profitable return for shareholders in a sustainable way.
A challenge for the directors of a firm is to balance short-term profits with an investment in the long-term value of the company.
Ethical objectives:
The moral principles that guide decision-making and strategy.
Are the actions of people and organizations that are considered to be morally correct.
Strategies
Set direction to achieve the objectives of an organization.
Planned for the long-term goal.
Broadly defined, not specific.
Examples:
Global branding.
Market share.
Disadvantages of Ethical objectives
Compliance costs.
Lower profits.
Stakeholder conflict.
The subjective nature of business ethics.
Advantages of Ethical objectives
Improved corporate image.
Increased customer loyalty.
Cost-cutting.
Improved staff morale and motivation.
Tactics
Methods used to direct strategies of an organization.
Short-term and frequently grounded to assist strategies.
Examples:
Sales revenue maximization.
Corporate Social Responsibility
Related to societal, environmental, and ethical conduct.
CSR policies affect shareholders and employees as they are used as guidelines.
It avoids actions that could potentially harm society.
CSR in leadership improves competitive advantage.
Managers and employees are guided by these policies to make decisions that benefit society.
CSR is rewarded by investors who look for companies with sustainable practices.
Examples:
Solar energy maximization.
Driving forces:
Higher sales.
Position growth.
Brand reputation.
Legal compliance.
Force Field Analysis
This is a decision-making tool that identifies the forces that are acting for or against a decision.
The forces for and against a decision are analyzed, and strategies are created to reduce the impact of opposing forces.
Restraining forces:
High costs.
Loss of customer trust.
Employee resistance.
Legal risks.
