Unit 1 - 1.3 Business objectives

Question 1

Hierarchy of objectives

Answer 1

Vision
Mission
Strategies
Tactics

Question 2

How does time relate to the hierarchy of objectives

Answer 2

Top: very long term
Bottom: very short term

Question 3

How does specificity relate to the hierarchy of objectives?

Answer 3

Top: broadly expressed ideas
Bottom: very specific

Question 4

Objectives

Answer 4

Specific, measurable, achievable, relevant, and time-bound targets (SMART targets) that give targeted direction to a business for the future

Question 5

SMART

Answer 5

Specific
Measurable
Achievable
Relevant
Time-bound

Question 6

Business aims

Answer 6

The long-term aspirations of an organisation (realised through objectives)

Question 7

Vision

Answer 7

An outline of an organisation’s aspirations in the distant future
* focus on the very long-term and are broad statements

Question 8

Mission

Answer 8

A simple declaration of the underlying purpose of an organisation’s existence and its core value
* focus on the medium to long-term and are well written, clearly defined and achievable

Question 9

Mission or vision:
Aspirational (i.e. “What do we want to
become?”).

Answer 9

Vision

Question 10

Mission or vision: Does not specify actual targets to
achieve

Answer 10

Vision

Question 11

Mission or vision: Declaration of purpose (i.e. “What is our
business?”).

Answer 11

Mission

Question 12

Mission or vision: Infrequently updated

Answer 12

Vision

Question 13

Mission or vision: Immediate time period

Answer 13

Mission

Question 14

Common business objectives

Answer 14

GPPE
* growth
* profitability
* protection of shareholder value
* ethical objectives

Question 15

Why is growth an objective to businesses?

Answer 15

Growth is essential for
survival in order to adapt to
ever-changing and
competitive business
conditions
* failure can lead to declining competitiveness and threaten firm’s sustainability
* usually measured by an increase in sales revenue or market share

Question 16

Profit equation

Answer 16

Total revenue - total cost

Question 17

Revenue equation

Answer 17

Price x quantity

Question 18

Total costs equation

Answer 18

Total fixed cost + total variable cost

Question 19

Market share equation

Answer 19

(total product sold / total product sold in market) x 100

Question 20

Why is profitability an objective to businesses?

Answer 20

Provides incentive for entrepreneurs to take risks due to personal gain
* it is traditionally the main objective

Question 21

Why is protecting shareholder value an objective to businesses?

Answer 21

To earn profitable return for shareholders in a sustainable way
* challenge for directors (shareholders) is to balance short-term profits (dividends) with investments in long-term value of the company

Question 22

Why is ethical consideration an objective to businesses?

Answer 22

Corncerned with societal perspectives on what ir morally correct
* focused on due to reputation and personal responsibility towards the moral principles that guide decision-making

Question 23

Advantages of ethical objectives (name 3)

Answer 23

• Improved corporate image
• Increased customer loyalty
• Cost-cutting
• Improved staff morale and motivation

Question 24

Disadvantages of ethical objectives (name 3)

Answer 24

• Compliance costs (taxes and addional costs to adhere to regulations)
• Lower profits
• Stakeholder conflicts (difference in what notion they support i.e. profit maximisation or health and safety)
• Subjective nature

Question 25

Startegies

Answer 25

Plans of action to achieve the objectives of an organisation * medium to long-term goals and expressed specifically * their fulfillment will allow reach of objectives

Question 26

Examples of strategic objectives (name and define 3)

Answer 26

* **Market standing:** the extent to which a business has presence in the industry * **Image and reputation:** consumer beliefs and perception of firm * **Market share:** firm's sale revenue as a percentage of industry's total sales

Question 27

Corporate social responsibility (CSR)

Answer 27

The consciencious consideration of ethical and environmental practice related to business activity * policies require regular review to adapt to evolving attitudes and expectactions of different market/time/country * can provide competitive advantages and long-term sustainability

Question 28

Examples of CSR (4)

Answer 28

* Provide accurate product labelling/description * Be conscious of impacts to the environment * Adhere to fair employment practices * Contribute to communities via volunteer or charitable work

Question 29

Theranos - ethical objectives case study

Answer 29

2003 - blood testing company claimed to have invented medical machine that could detect diseases using one drop of blood * 2016 - firm shut down due to investigation which showed machine has technological flaws * produced widespread innacurate data * 2018 - CEO and COO were charged with massive fraud by authorities

Question 30

Stores in COVID-19 - Tactics case study

Answer 30

Groery stores during COVID * stop-and-go system or delivery services were implemented * some transitioned from cafés to grocery stores * many had to let go of workers

Question 31

Misleading food labels - CSR case study

Answer 31

Use of "natural" label on food products without standardised definition * many contain artificial ingredients * consumers (USA) are asking for ban of label due to interpretive nature

Question 32

Recycling furniture at IKEA - CSR Case study

Answer 32

Transition to a CBM system * initially 200 million physical copies of catalogue published in 2016 * transitioned to online catalogue in most countries * reuse, buy back thousands of used products across 27 countries * in order to keep them in circulation for as long as possible

Question 33

Wage theft at Funtea - CSR case study

Answer 33

Coworker assaulted (slapped and kicked) after confronting boss about underpayment ($10 /day) - 2021 Australia? * video leaked and viewed by over 50 million * assailant given assault conviction at court * fully paid back $672 underpayment * in response: widespread underpayment and exploitation of workers in Chinatown was discovered

Question 34

Community engagement by Nissan - CSR case study

Answer 34

Nissan and Habitat for Humanity refurbished/built more than 300,000 humes for families in need * with over $25 million private money from donations * aims to provide affordable, safe and decent housing for all