Objectives and strategies - Business Context Flashcards
(19 cards)
What should learners be able to do by the end of the session?
Discuss the purpose of organisational aims and objectives, recognise that objectives can be short, medium or long term, and explain the strategies organisations can implement to achieve objectives.
What are corporate objectives designed to enable?
Corporate objectives are designed to enable an organisation to succeed by giving it a clear sense of direction, coordinating business operations, setting functional objectives, delegating departmental authority, and measuring the results of its actions.
What are functional objectives?
Functional objectives are targets given to each department, designed to achieve corporate objectives, used to design and coordinate operations, and serve as key performance indicators (KPIs).
What are the main types of corporate objectives?
The main types of corporate objectives are survival, profit satisficing, profit maximisation, growth maximisation, and diversification.
What do survival objectives support?
Survival objectives support planning for how much money is required to survive one year, minimum level of sales to cover all costs, minimum number of staff needed to operate, and minimum levels of stock bought to preserve cash flow.
What is profit satisficing?
Profit satisficing occurs when owners or shareholders agree on a ‘good enough’ level of profit they are happy to receive from the business.
What are potential profit maximisation objectives?
Potential profit maximisation objectives include reducing risk to the organisation, increasing capital reserves, generating retained profits, paying shareholder dividends, maintaining business credibility, and achieving maximum productivity/efficiency.
What are growth maximising objectives?
Growth maximising objectives include increasing market share, attracting new staff/talent, expanding products/services, retaining profit to fund expansion, and increasing production/service capacity.
What are diversification objectives?
Diversification objectives include attracting financial investment, achieving economies of scale, identifying new target markets, and designing/developing/acquiring new products/services.
What does SMART stand for in setting objectives?
SMART stands for Specific, Measurable, Achievable, Relevant, and Time-bound.
What are the time scales for short-, medium-, and long-term objectives?
Short-term objectives are achieved within one year, medium-term objectives within five years, and long-term objectives within five to ten years based on achieving medium-term goals.
What is an organisational strategy?
An organisational strategy is a business action plan designed to achieve long-term corporate objectives.
What are survival strategies?
Survival strategies may include saving cash for better liquidity, cost-cutting actions, pivoting activities, regular SWOT analysis, focusing on marketing, reducing profit margins, and having a back-up plan.
What is required for profit satisficing to be achievable?
Profit satisficing is achievable if the satisfaction level is agreed and communicated.
What does profit maximising mean for an organisation?
Profit maximising means everyone in the organisation focuses on generating revenues, increasing sales, or reducing costs.
What are growth maximising strategies?
Growth maximising strategies may include market penetration, product development, market expansion, market segmentation, and diversification.
What are diversification strategies?
Diversification strategies include organic growth, acquisitions, and mergers.
What do strategic plans set out?
Strategic plans set out the destination, plans for the journey, actions needed to keep going, milestones to keep on track, and key performance indicators to check if it’s a job well done.
What was discussed in the session summary?
The session discussed the purpose of organisational aims and objectives, how businesses set and use objectives to aim for success, the different types of objectives, SMART objectives, and strategies organisations can implement to achieve various objectives.
