Objectives Flashcards
(20 cards)
What are mission statements?
A mission statement sets out the vision and aims of an organisation. It reforms current employees, prospective employees and customers of the organisations values and plans for the future.
Eg. Microsoft
What is the objectives of the private sector?
- Profit maximisation
- survival
- growth (to dominate the market)
- social responsibility (to improve image)
What is the objectives of the public sector?
- provision of a service (such as health & education)
- customer satisfaction (funded through taxation)
- efficient use of funds (use of public funds)
- social responsibility (benefit the community, environment and humanity as a whole, to improve image)
What is the objectives of the third sector?
- cause/aim (meeting their main aim such as curing cancer)
- efficient use of funds/donations
- social responsibility (to improve image and benefit humanity)
What is corporate social responsibility?
An organisation will aim to behave in a responsible way such as:
- sustainable sources and recycling
- reducing carbon footprint
- paying suppliers fairly
- promoting healthy eating to employees
Adv of CSR
- increased company loyalty
- may provide competitive edge
- may decrease long term costs
- government incentives
Disadv of CSR
- increased short term costs
- increased training may be required
- may lose competitive edge
What is satisficing?
This is when a business aims for a satisfactory position. A business may aim for less than what would be considered ideal die to financial restraints on external factors
What are managerial objectives?
These may be driven by the incentive of receiving bonuses or fringe benefits such as the provision of a company car.
These incentives can motivate the management team but can also cause difficulty if managerial and company objectives clash.
Methods of growth:
- Vertical Integration
- Horizontal Integration
- Diversification
- Takeover
- Merger
- Organic
- Demerger
- Divestment
What is a merger?
When two businesses of the same size become one business.
Adv: increases market share
Disadv: may disagree on direction of business/control
What is a De-merger?
When a business splits into two or more businesses.
Adv: increased efficiency through specialisation
Disadv: financial cost of rebranding
What is a Takeover?
When one large business takes over a smaller business.
Adv: may benefit from skilled work force and may gain ownership of patents (profits)
Disadv: smaller business’ employees may struggle to integrate into a larger business
What is a divestment?
When a business sells off its assets or smaller parts of the business to raise finance.
Adv: increased efficiency through focus on profit making parts of business and finance can be raised quickly
Disadv: some assets may have to be written off and sold for less if deemed to be unsuccessful. Or the sold off part may become successful in the future
What is Horizontal Integration?
When two businesses offering the same product or service join together
Adv: competition reduced and increases market share
Disadv: more risk due to less diversification/ increased reliance on one market. Also quality may suffer due to lack of competition
What is backward vertical integration?
Taking over a supplier.
Adv: increased control over supply chain
Disadv: focusing on new activities can affect core activities
What is forward vertical integration?
Taking over a customer.
Adv: businesses can control the supply of their products
Disadv: monopolising markets can have legal implications
What is diversification?
When two businesses that provide different goods and services join together.
Adv: allows the firm to spread risk and can overcome seasonal fluctuations in the market
Disadv: Can cause the company to lose focus on core activities
What is organic (internal) growth:
Occurs when the business increases the number of branches and employees it has.
This should increase market share and profits.
What is Outsourcing/contacting out:
When an organisation pays another firm to do certain work for them. This could br transport, recruitment, printing, security, cleaning etc.
Adv: in certain cases the organisation doesn’t have to invest in expensive tech, recruitment and training costs are reduced, the work is undertaken by another business which will offer more skill and expertise
Disadv: there could be a risk of losing sensitive data and a resulting breach of confidentiality, management might lose control over those activities which are outsourced
