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Business IB > 1.3 Organisational objectives > Flashcards

1.3 Organisational objectives Flashcards

(62 cards)

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1
Q

Mission statement

A

A statement of the business’s core aims, phrased in a way to motivate employees and to stimulate interest by outside groups

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2
Q

Vision statement

A

A statement of what the organisation would like to achieve or accomplish in the long term

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3
Q

Reasons for vision and mission statement

A

Quickly inform groups outside the business of aim and vision

Motivate employees

Guide individual employee behaviour if it is based on work

Explains what the business is about

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4
Q

Criticisms of vision and mission statement

A

Too vague

Based on a public relations exercise to make stakeholders feel good

impossible to analyse

No specific detail

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5
Q

Corporate aims

A

The long term goals which a business hopes to achieve

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6
Q

Divisional/operational objectives

A

Short or medium term goals or targets usually specific in nature which must be achieved for an organisation to attain its corporate aims

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7
Q

Benefits of a corporate aim

A

Become the starting point for divisional/operational objectives on which effective management is based.

Can help develop a sense of purpose and direction for the whole organisation

Allow an assessment to be made

provide the framework within which the strategies or plans of the business can be drawn up

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8
Q

What should operational objectives be?

A

SMART

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9
Q

What does SMART stand for?

A

Specific

Measurable

Achievable

Realistic and relavant

Time specific

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10
Q

Why are divisional, operational objectives set by senior managers?

A

Coordination between all divisions

Consistency with strategic corporate objectives

Adequate resources are provided to allow for the successful achievement of the objectives

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11
Q

Hierarchy of objectives

A

Aim

Corporate objectives

Divisional objectives

Departmental objectives

Individual targets

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12
Q

Example of an aim

A

To maximise shareholder value

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13
Q

Example of a corporate objective

A

To increase profits of all division by 10% per year

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14
Q

Example of a divisional objective

A

For marketing would be to increase profit margins by 7%

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15
Q

Example of an individual target

A

For marketing would be increase shares by an average of 5% per client

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16
Q

Strategy

A

A long term plan of action for the whole organisation, designed to achieve a particular goal

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17
Q

Tactic

A

Short term policy or decision aimed at resolving a particular problem or meeting a specific part of the overall strategy

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18
Q

Differences between strategy and tactics

A

Strategy decisions are long term

Strategy decisions are difficult to reverse once made

Strategy decisions are taken by directors

Strategy decisions are cross functional

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19
Q

What are the common corporate aims

A

Profit maximisation

Profit satisfying

Growth

Increasing market share

Survival

Maximising short term sales revenue

Maximising shareholder value

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20
Q

Disadvantages of profit maximisation objective

A

High short term profits can lead to competitors to enter the market

Small business owners are more concerned over independence

Most businesses look at return on capital employed

Not liked by all stakeholders

Difficult to determine profit maximisation

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21
Q

Disadvantages of growth objective

A

Over rapid expansion can lead to cash flow problems

Can come at the expense of profit margins

Large businesses can experience diseconomies of scale

Growth in new business areas can lead to loss of focus

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22
Q

Advantages of being brand leader with the highest market share

A

Retailers want to stock the best selling brand

Profit margins offered to retailers can be lower than for competing brands as shops are so keen to stock it, more profit for the producer

Promotional campaigns can say that they are the brand leader

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23
Q

Ethics

A

Moral guidelines that determine decision making

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24
Q

Ethical code

A

A document detailing a company’s rules and guidelines on staff behaviour that must be followed by all employees

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25
3 examples of ethical codes being expensive in the short term
Using ethical and Fairtrade suppliers can add to a business's costs Not taking bribes to secure business contracts can lead to a loss in sales Paying fair wages raises costs
26
3 advantages of ethical codes in the long term
Avoiding expensive court cases can reduce costs of fines Lead to good publicity More likely to be awarded government contracts
27
Stakeholders
People or groups of people who can be affected by, and therefore have an interest in, any actionably an organisation
28
Corporate social responsibility
This concept applies to those businesses that consider the interests of society by taking responsibility for the impact of their decisions and activities on customers, employees, communities and the environment
29
Benefits of a business adopting CSR policies
Image can be improved - competitive advantage Attracting the best motivated and most efficient employees Better relations with stakeholders Higher long term profitability
30
Disadvantages of a business adopting CSR policies
Short run costs could increase Shareholder may be reluctant to accept lower short run profits Loss of cost and price competitiveness if rival business do not follow Consumers may prefer low prices during recession
31
Social audits
An independent report on the impact a business has on society. This can cover pollution levels, health and safety record, sources of supplies, customer satisfaction and contribution to the community
32
What details can social audits include?
Health and safety record Contribution to local community events and charities Proportion of supplies that come from ethical sources Employee benefit schemes Feedback from customers and suppliers on how they perceive the ethical nature of the business's activities Environment
33
Advantages of social audits
Identifies what social responsibilities the business is meeting - and what still needs to be achieved Sets targets for improvement in social performance by comparing audits with the best performing firms in the industry Gives direction to the action plans a business still needs to put into effect to achieve its objectives Improves a company's public image and this can be used as a marketing tool to increase sales
34
Disadvantages of social audits
If the social audit is not independently checked - as published accounts must be - will it be taken seriously by stakeholders Time and money must be devoted to producing a detailed social audit Many consumers may just be interested in cheap goods A social audit does not prove that a business is being socially responsible
35
Evaluation of social audits
Social audits need to be made compulsory as otherwise they will not be taken seriously Companies need to be accused of using them as a publicity stunt Time consuming and expensive to produce and publish, limit their value
36
Issues relating to corporate objectives
Must be based on the corporate aim and should link in with it They should be achievable and measurable if they are to motivate employees They need to be communicated to employees and investors in the business. They form the framework for more specific departmental or strategic objectives Should indicate time scale (SMART)
37
Conflicts between corporate objectives
Growth versus profit Short term versus long term Stakeholder conflict
38
Factors determining corporate objectives
Corporate culture Size and legal form of the business Public sector or private sector businesses Well established businesses
39
Reasons for a business to change objectives
Satisfied the survival objective External competitive and economic environment changes Short term objective of growth in sales or market share
40
What do businesses need to consider when changing objectives?
Is the internal/external change significant and long lasting enough to make a change in objectives? What are the risks of not changing How can the new objective be managed?
41
SWOT analysis
A form of strategic analysis that identifies and analyses the main internal strength and weaknesses and external opportunities and threats that will influence the future direction and success of a business
42
Strengths of a SWOT analysis
Internal factors that can be looked upon as real advantages. Basis for developing competitive advantage.
43
Weaknesses of a SWOT analysis
Negative factors Eg: poorly trained workforce, limited capacity, obsolete equipment
44
Opportunities of a SWOT analysis
Potential areas for expansion of the business and future profits
45
Threats of a SWOT analysis
Hindrances to the business
46
How does a SWOT analysis help managers?
Assess the most likely successful future strategies and the constraints on them.
47
Issue with SWOT analysis
Subjective Not quantitative
48
Ansoff's matrix
A model used to show the degree of risk associated with the four growth strategies of: market penetration, market development, product development and diversification
49
What type of strategy is the Ansoff's matrix used for?
Growth strategies
50
How is market penetration made?
Existing product + existing market
51
Market penetration
Achieving higher market shares in existing market with existing products
52
How is market penetration made?
New product + existing market
53
Product development
The development and sale of new products or new developments of existing products in existing markets
54
How is market development made?
Existing product + new market
55
Market development
The strategy of selling existing products in new markets
56
How is diversification made?
New product + new market
57
Diversification
The process of selling different, unrelated goods or services in new market
58
Advantage of diversification
If successful, higher gains can be reaped from various industries Spreads out risks and safeguards against economic shocks over diverse product portfolio
59
Advantage of market development
New distribution channel Expanding geographically Attract new market segments New consumers may not like the product
60
Advantage of product development
``` Innovation to replace existing products Focusing on consumer needs Brand extension Capitalize on technology Consumers in existing market may not like the new product ```
61
Advantage of market penetration
``` Seeks to maintain or increase market share Price adjustments Increase of market promotion Minor product improvements Intense competition ```
62
Issue with Ansoff's matrix
Only considers two factors No detailed marketing options

Business IB (39 decks)

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