Please enable JavaScript.
Coggle requires JavaScript to display documents.
Business objectives - Coggle Diagram
Business objectives
Objectives of a private sector business
Profit satisficing
Growth
downsides
Cash flow problems
Expense of lower profit margin (sales)
Diseconomies of scale
Low short term return to shareholders
Loss of focus and direction for the firm
Profit maximization
downsides
Small business owners could be more concerned about balanced work life as well as leisure time
Stakeholders that aren't shareholders and owners have different objectives
Businesses usually want to maximize market share (revenue)
Constant price change may make costumers feel upset
Can encourage competitors to enter markets
Increasing market share
Retailers want to stock best selling brands
Supplied to retailers at low discount rate
Effective promotion using we are the best yay
Corporate Social Responsibility (CPR)
Define: having objectives about social, environmental and ethical issues
Pressure group: They force and pressure businesses to reconsider certain things they're doing
Define: They're groups that force businesses to be more environmentally friendly
Survival
Increasing shareholder value
Maximizing short term revenue
The role of objectives in the stages of business decision making
Analyse the likely impacts of all decision options on the chance of achieving business objectives
Make the strategic decision
Gather data about the problem and identify possible strategic solutions
Plan and implement the decision
Assess and clarify the problem that requires strategic action
Review its success against the original business objectives. Has the business, through its decisions, achieved its objectives?
Set objectives to provide focus for strategic decisions
SMART
Achievable - Don't set something that's impossible to be achieved in the time given
Realistic and relevant - Compare to the resources of company (should be realistic)
Measurable - Have a quantitative value
Time limit - Without it its impossible to fully access if the business met the goal or not
Specific - Focus on what the business does and apply directly
Factors that determine business objectives
Size and legs form of the business - it determines not only the kind of business goal but also the quantity and specific time measurements (SMART goals )
Number of years in operation - Usually at the beginning small businesses might focus on survival and growth while bigger businesses may tend to focus on market share
Public sector or private sector - both of these in general have different goals as one of them usually tend to focus more on profit while the other tends to focus on helping people
Business culture - Usually different industries have different norms so a certain industry May have more businesses doing this goal that's different from he other ones
Communicating objectives
Employees understand the plan and how they individually fit into it
Interlinked goals of that of employee and business
Employees and mangers have better understanding of the business's wider goals
Managers stay in touch with employee and mintor more easily to make sure goal on track
Clear business objectives can
Give focus to future business strategies
Way to access success or failure
Sense of direction and purpose (motivates)
Objectives of social enterprise
Economic
To make profit to return to the business and to the owners a little bit
Financial
Social
Environmental
Objectives of public sector businesses
Encourage economic development
Achieve high environmental standards
Provide good service for public
Business aims and mission statements
Mission statements
downside
Too vague (ends up saying little specific and cant be actual targets)
Just to make stakeholders feel good
Can't analyze or disagree
Businesses could have the same statements
upside
Guide employee behavior
Establish what benefits other groups by the business existing
Motivates employees
Info outside what the business is about
Mission statements: meant to sum up business aim in an attractive and motivating way
McDonalds: to make delicious feel-good moments easy for everyone
Business aims: Broad indication of what business hopes to achieve in the future
McDonald's: to serve good food in a friendly and fun environment, to be a socially responsible company, and to provide good returns to its shareholder
How objectives may change over time
Stabilizing small businesses - initially the small businesses want to survive but now they're surfacing just fine cause their stable so now the owner may want it to grow instead
Change in competitive and economic changes - Entry of like a very powerful company in a market or a economic recession may make its that profit or growth business has to survive instead
Short term to long term - short term could be temporarily they want to grow but then they need to change it to something more sustainable like profit or sales
Business strategy and tactics
Tactics: Broken up to smaller pieces business strategy like tactical decision about pricing decisions and promotion
Business strategy: the long-term plans of action of a business (so its just translated from the objective so managers know what to do)
Translation of objectives into targets and budgets
Target - It's like the short term mini goals that needs to be achieved for the whole hing to happen
Budget - It's like the plan thing where you plan how much your willing to allocate
Ethical influence on business objectives and activities
Ethical code - The growing acceptance of corporate social responsibility adopted a method that influences the way business decisions are made
Example of unethical: Paying very low wages because the law control is not high
Following ethical code
Short term impact
Fail to secure significant sales (no bribes)
Lost in sale (not advertising to young and pestering children for toys)
More business cost
Reduce competitiveness
Long term impact
Good publicity (increase sales)
Awarded government contracts (more likely)
Well qualified employees attracted to work here
Avoid expensive courts (reduce cost)
Definition: A stated measureable target that a business plan to achieve