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UNIT 7 chapter 1 (Corporate objectives (8 areas of business activity where…
UNIT 7 chapter 1
Corporate objectives
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They provide guidance for junior managers who have to set objectives further down on the organisational structure
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Small businesses (sole traders) may operate with different corp objectives such as providing excellent levels of service
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Mission statement
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They focus on: Values, Aims, activities within the firm and the importance of investors customers and employees :
:!:Case study: John Lewis- 31 stores, 226 : Waitrose : supermarkets (UK) and is owned : by 90,000 employees (partners) its mission statement focuses on its staff! :!:
By setting out a mission everyone in the business knows what they should be trying to do, making decision making easier as everyone is on the same page. They also motivate people
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Vision Statement
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Case study: Oxfam- vision statement focuses on having a world without poverty and where everyone has equal rights
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Short termism
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Prevents senior managers thining in the long term and may lead to a lack of training and research into new products
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A corporate strategy is a long term plan to achieve the businesses vision. e.g. if a firm wanted to become a market leader it may do this by achieving a strategy based on low prices.
They involve a major commitment and are difficult to reverse e.g investing in new product development requires large financing and it involves a lot of uncertainty
Benefits of a clear strategy is hat it sets out the firms overall plan and helps employees work out ways to implement this strategy
Strategic decisions
Judgements made by senior managers that are long term, involve a major commitment of resources and are difficult to reverse
Shareholder returns
The financial benefits derived by shareholders from buying a company's shares and are a mixture of an appreciating share price and dividends paid
Dividends
The part of a company's profits that are paid to shareholders in proportion to the number of shares they own
Tactical decisions are about how the firm with implement the strategy. They tend to be short term so that fewer resources are used.
Functional decision= A judgement taken by managers responsible for one aspect of a businesses activities, such as marketing or HR
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New leader= They have a huge influence on the strategic decisions set. CEO of Thomas Cook set tough objectives (reducing costs and made the company more dependent on internet sales). This decision reduced the number of jobs but improved its profitability
Culture= Workforce have a set of values, attitudes and beliefs (culture). E.g a business may focus on customers where they are highly valued
State of the economy= The UKs economy is still struggling after the 2008/9 recession, customer wages were still at 2004 level and wont rise until 2019/20
Global prices= Oil prices have fallen by 50% to $52 a barrel- this has resulted in strategic decisions in the oil industry leading to a cut in exploration activity
Tech changes= Encourages firms to adopt S decisions based on capital intensive production (self checkouts)
Migration= Numbers leaving the UK have varied between 200,000 and 400,000 annually, but has been significantly lower than those immigrating. Resulting in net migration (more people have entered the UK than left)