Chapter 6 - Achieving Business Goals

Question 1

Benefits of goals for managers

Answer 1

• serves as targets = decisions are easier to make is one understands what the business is trying to achieve
• measuring sticks = goals act as benchmarks
• motivation = goals represent a challenge or an aim
• commitment = getting am employee to achieve or participate in a goal setting process provides a personal stake in the success of a business

Question 2

What are some financial goals?

Answer 2

• to maximise profits
• increase market share
• grow/expand
• improve share price

Question 3

What are some non-financial goals a business might set?

Answer 3

• social goals

- environmental goals

Question 4

What is profit maximisation?

Answer 4

Occurs when there is a maximum difference between the total revenue (the number of sales made x the price) coming into the business, and total costs being paid out

Question 5

How can you maximise profits?

Answer 5

• increase sales, as consumers will purchase more
• create innovative products
• deliver better services
• create a well-targeted marketing campaign

Question 6

What did Virgin Airlines do when they first began operating?

Answer 6

• they initially set very low prices to tempt passengers away from established carriers
• Virgin has a long term goal ‘the desire to maximise profits’, but they understand this will take years to achieve

Question 7

What is market share

Answer 7

Refers to the business’s share of the total industry sales for a particular product

Question 8

Why is it important for a business to have a large market share?

Answer 8

• because small market gains often translate into large profits

Question 9

How do large businesses increase their market share

Answer 9

• develop an extensive product range using many different brand names
• merge/acquire (with) another business

Question 10

What is promotion

Answer 10

Describes the methods used by a business to inform, persuade and remind a market about its products

Question 11

Why might some businesses not wish to grow?

Answer 11

• avoid the added pressures of expansion in a desire for a quiet life or a particular lifestyle
• maintain personal contact with the customers

Question 12

How can a business grow externally?

Answer 12

• merging with another business (e.g. when Qantas merged with Jetset Travel)
• acquiring another business (e.g. when Coca-Cola Amatil purchased Neverfail Springwater and Mount Franklin bottled suppliers)

Question 13

How can a business undergo internal growth?

Answer 13

• employ more people
• increase sales
• introduce innovative products

Question 14

What is a share

Answer 14

Part ownership of a public company

Question 15

Why do people buy shares?

Answer 15

• in the hope of selling them for a higher price
• owning shares in a company entitles an investor to a part of the company’s profits, which is distributed in the form of dividends

Question 16

How do companies maximise the returns of their shareholders

Answer 16

• achieved by keeping the share price rising, and paying back healthy dividends

Question 17

What are three main social goals?

Answer 17

1. Community service - business sponsorship of wide range of community events, promotions and programmes
2. Provision of employment - employing family members
3. Social justice - employees and community members treated fairly

Question 18

How are businesses reaching environment goals?

Answer 18

• sustainable development (e.g. Club Assist, SITA Australia, Johnson and Johnson)
• governments imposing stricture environmental regulations on business practices

Question 19

How have Club Assist been environmentally friendly?

Answer 19

• they branded batteries are made using recycled lead and plastic
• developed battery recycling programmes designed to maximise collection rates for batteries

Question 20

Why can it be difficult for businesses to achieve all their financial and non-financial goals simultaneously?

Answer 20

• because links between goals make some incompatible and/or conflict with each other
• e.g. maximising profits CONFLICTS with increasing market share

Question 21

To be effective, business goals should be S.M.A.R.T.

What does this stand for?

Answer 21

• S pecific
• M easurable
• A chievable
• R ealistic
• T imebound

Question 22

What is staff involvement

Answer 22

Involving employees in the decision making process and giving the, the necessary skills and rewards

Question 23

Staff will only be successful if a business provides employees with the necessary expertise as well as recognising the importance of:

Answer 23

• innovation
• motivation
• mentoring
• training

Question 24

Innovative activities of staff are referred to as…

Answer 24

Intrapreneurship within the business

Question 25

Tips for motivating staff

Answer 25

- communicate regularly with staff - make clear expectations - delegate responsibility - encourage suggestions - provide safe working environment

Question 26

Rewards/Tasks that motivate people (not money incentives)

Answer 26

- provide interesting work which is challenging and rewarding - train your staff - offer opportunities for employees to advance - show respect and courtesy - listen to your staff to find out what motivates them

Question 27

Define mentoring

Answer 27

- the process of developing another individual by offering tutoring, coaching and modelling acceptable behaviour

Question 28

What is socialisation

Answer 28

The process a new employee undergoes in the first few weeks of employment through which he or she learns how to cope and succeed

Question 29

Why can a formalised mentoring programme be beneficial?

Answer 29

- ensures access to mentors of all employees, regardless of levels of experience, backgrounds, gender or ethnicity - the participants in the mentoring relationship know what is expected of them - it assists with training and development of all employees, and passes on skills and abilities - provides career and physiological support - a friend + counsellor - increases possibility of skill transfer

Question 30

What is employee training

Answer 30

Generally refers to the process of teaching staff how to perform their job more efficiently and effectively by boosting their knowledge & skills

Question 31

Multi-skilled employees are better able to:

Answer 31

- adapt to a rapidly changing technological environment - provide better customer service - participate effectively in work teams, leading to innovation - gain promotion, making their commitment to the business greater

Question 32

What are the goals of training employees

Answer 32

- improve employee productivity | - develop multi-skilled employees