1.3 business objectives

Question 1

vision statement

Answer 1

a philosophy, vision or set of principles which steers the direction and behaviour of an organisation

Question 2

mission statement

Answer 2

states a company’s purpose and explains why the business exists
generally include the business aims and, whether expressly stated or implied, indicates its most important values

Question 3

business objectives

Answer 3

the articulated, measurable targets that a business must meet to achieve the aims or long term goals of the business. It is critical that objectives are specific and measurable

Question 4

strategic objectives

Answer 4

the long term goals of a business that indicate how the business intends to fulfil its mission
strategic objectives usually include performance goals, such as increasing market share or improving profitability

Question 5

tactical objectives

Answer 5

short to medium term targets that, if consistently met, will help a business reach its strategic goals
whereas strategic objectives are typically set by the board of directors with top executive management, tactical objectives are usually set by executive management working with middle level management

Question 6

operational objectives

Answer 6

day to day objectives set by floor managers (and sometimes workers themselves) so that the company can reach its tactical objectives

Question 7

what does SMART objectives stand for

Answer 7

specific
measurable
achievable
relevant
time-specific

Question 8

business strategy

Answer 8

is a plan to achieve a strategic objective in order to work towards the aims of the business
this strategy will be medium to long term and will require senior managers to make the decisions approved by the owners and/or the CEO

Question 9

business tactic

Answer 9

is a plan to achieve a tactical objective to work towards the strategies of the business, which themselves are the path to reaching the aims of the business
this tactic will be short term and will require middle managers to make the decisions approved by the senior managers
tactics are easier to change

Question 10

what may changes in the internal environment of a business include

Answer 10

leadership
HR
organization
product
finance
operations

Question 11

what may changes in the external environment of a business include

Answer 11

STEEPLE
social
technological
economic
ethical
political
legal
ecological

Question 12

corporate social responsibility

Answer 12

is the view that businesses, rather than focusing solely on increasing shareholder value, should contribute to the economic, social, and environmental well-being of society

Question 13

why do organisations set ethical objectives

Answer 13

customer loyalty
positive image
positive work environment
reduction of the risk of legal redress
satisfying customers ever higher expectations for ethical behaviour
increasing profits

Question 14

growth strategies

Answer 14

strengths/opportunities

Question 15

defensive strategies

Answer 15

threats/weaknesses

Question 16

re-orientation strategies

Answer 16

weaknesses/opportunities

Question 17

defusing strategies

Answer 17

strengths/threats

Question 18

when does market penetration occur

Answer 18

when a business grows by increasing its market share, selling more of its existing products in the same market

Question 19

market development

Answer 19

expands the market by looking for new markets or for new market segments in the existing markets

Question 20

key factors towards the success of market penetration

Answer 20

• growth potential of market
• strength of customer loyalty
• power and ability of competitors

Question 21

key factors to reduce the risks of market development

Answer 21

• effective market research
• having local knowledge on the ground
• having an effective distribution channel

Question 22

product development

Answer 22

development of new products for the existing market

Question 23

key factors to reduce risks of product development

Answer 23

• effective market research
• strong research and development system
• have first mover advantage

Question 24

diversification

Answer 24

• riskiest growth strategy
• involves introducing a new product into a new market
• combines two elements of risk: lack of familiarity/experience in new market and the fact that the new product is unexpected

Question 25

key factors to reduce the risk of diversification are

Answer 25

• effective market research
• due diligence testing to determine: attractiveness and cost of entering the market
• recognition of existing business
• possible tie-ups with other business with the necessary experience