3.1.1 Role and purpose of corporate objectives Flashcards
(22 cards)
mission statement
a qualitative statement of the businesses aims
Business aims
a long term plan of which business objectives are derived
Business objectives
A time assigned target derived from the goals and set in advance of strategy to achieve its corporate aims
Business strategy
A medium to long term action plan to achieve the business objectives
SMART objectives
An acronym used to guide goal setting. Specific Measurable Achievable Relevant Time-bound
SMART objectives - Specific
the object should state exactly what is to be achieved
SMART objectives - Measurable
An objective should be capable of measurement so that is is possible to determine if it has been achieved
SMART objectives - Achievable
The objective should be realistic given the circumstances in which it is set and the resources available to the business
SMART objectives - Relevant
Objectives should be relevant to the people responsible fro achieving them
SMART objectives - Time-bound
Objectives should be set with a time frame in mind which should be realistic
Common business objectives
Survival Profit maximisation Sales maximisation Market share Cost efficiency employee welfare Customer satisfaction Social objectives
Objective hierarchy
Corporate objective
Functional objectives - different departments
Unit objective
- corporate objectives translate down to each department or function
Factors influencing whether or not objectives are fulfilled - internal
- Age of business
- Size and legal business
- Ownership
- Views of owners and managers
- Risk and attitude to risk
- corporate culture
Factors influencing whether or not objectives are fulfilled - External
- Competition
- Legislation
- Political factors
- State of the economy
- social attitudes
- market conditions
Mission statements
The over-riding goal, the reason for a business’s existence and its vision for the future
Who is a mission statement intended for?
- Employees
- Customers
- Investors
- Society
What makes a good mission statement? - what is its purpose?
- A clear sense of purpose
- Excites, inspires, motivates and guides
- Easy to understand and remember
- Differences business from competitors
- For all stakeholders
Criticisms of mission statements
- Sometimes business actions do to reflect the statements - people will lose loyalty and integrity
- often too vague and general and not memorable
- they don’t always clearly set out purpose or the uniqueness compared to rivals
- Often a PR stunt
- Sometimes regarded cynically by staff as business not always keeping to their word
- to be effective everyone has to buy into it
What factors influence the mission statement?
- culture
- ethos and values
- shareholders views
- Values of stakeholders - community and employees
Strategic approaches
long-term plan which require many resources can be difficult to revers once implemented
Tactical approaches
short-term plans which often require dew resources and can be stopped or reversed if this is required
Links between mission, corporate objectives and strategy:
A business’ mission will inform the choice of corporate objectives as corporate objectives will be designed in such a way to meet the overall mission
Businesses can use strategies to work towards their overall corporate objectives
