Business Objectives

Question 1

Define the term ‘corporate aim’

Answer 1

Is the goal a business wants to achieve.
These goals are usually set for a long period of time.
For example a company aims to maximize value for shareholders through a strategy of profit growth and increase of market share.

Question 2

What is a mission statement ?

Answer 2

• is a statement of business’s core aims, phrased in a way to motivate staff and to stimulate interest to outside groups.
• communicating a mission statement is just as important as establishing. Can be done by placing it in newsletter, public accounts, cooperate plans
• example-
  Google
  ‘Organize worlds information and make it universally accessible and useful’

Question 3

What is a corporate social objective?

Answer 3

-business that considered interest of society by taking responsibility for decisions and activities on: employees, community and environment .
- when businesses take this objectives, they are not just aiming for profit
Example-
Toms shoes- buy one pair and one pair is given to a person in need

Question 4

What is a management objectives?

Answer 4

• A method of coordinating and motivating all staff in an organization by dividing its aims into specific targets for each department, manager and employee
• effective way of delegating authority.

Question 5

What is ethical code?

Answer 5

A document detailing a company’s rules and guidelines on staff behavior that must be followed by all employees
More and more companies are considering ethical dimensions
Example. Should a bank invest in a company that sells weapons or tests on animals?

Question 6

SMART

Answer 6

SMART

Question 7

Explain the term ‘specific’

Answer 7

Objectives that focus on what the business does and should apply directly to the business.
You know exactly what is being achieved.
Example : set 75% of bed occupancy over winter,

Question 8

Term measurable

Answer 8

-objectives that have a quantitive value.
-These are likely to be more effective for directors and staff to work towards.
-it is a short term goal.
Example- increase sales in south east region by 15 % this year.

Question 9

Explain the term ‘Achievable’

Answer 9

If the objective can be accomplished successfully.
This can be seen by examining the business’s marketing environment, and firms capabilities of increasing its market share
Example- increase market share to 3% in 12 months.

Question 10

Explain the term ‘realistic’

Answer 10

This is where objectives should be relevant when compared with companies resources.
Done by verifying if what is going to be achieved, for example increase market share by 3% in 12 months, is realistic hence is the business capable of achieving that increase in 12 months?

Question 11

What is meant by time specific

Answer 11

This is the time limit that the objective is going to have, in order to be achieved.

Without time limit it will be impossible to see if objective has actually been met

Example. In 12 months

Question 12

What is meant by strategy?

Answer 12

-is a way of planning how the objects are going to be achieved

Question 13

What is tactics

Answer 13

Tactics is a short term method policy that form of the implementation of the overall strategy

Question 14

What are the common corporate objectives?

Answer 14

Profit Maximization 
Profit satisfying 
Increasing market share 
Growth 
Survival 
Maximizing short term revenues 
Maximizing shareholder value

Question 15

Profit maximization

Answer 15

To achieve maximum difference from what the business’s buy raw materials at and what they sell these finished goods for.

If a venture does not look into maximizing profits, it is usually seen as a MISSED OPPORTUNITY

Question 16

Disadvantages of profit maximization

Answer 16

1. RISK- Company may become so focused on that one strategy on how to maximize their profit, that they forget about how they may loose everything if economy gives a sudden turn.
2. EXPECTATIONS-
   When a company follow profit maximization they start to see the prices as premium and the cutting costs as primary goal.
   Hence they loose goodwill customers and suppliers.
3. Business Analysts- Asses business performance through CAPITAL EMPLOYED rather than total profit .
4. Competitors are encouraged

Question 17

Advantages of increasing market share

Answer 17

Retailers will want to stock and promote best sellling brand.

Profit margins offered to retailers may be lower in price- more profit for producer

Effective promotional campaigns

Question 18

Limitations of growth

Answer 18

• expansion too quick can lead to cash flow problems
• diseconomies of scale
• growth in new business areas may result in a lack of focus on other business areas
• increase in sales may be due to low profit margins- low quality products.