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business objectives (tutor2U) - Coggle Diagram
business objectives (tutor2U)
specific intended outcomes of business strategy and activity
targets which a business sets to help it achieve it's aims
main functions of business objectives -state what is needed to be achieved
-target for individual and group achievement
a way to measure performance
typical corporate objective
sales revenue
-profit
-return on investment
-growth
-market share
business objectives need to be smart
-specific: the objective should state exactly what is to be achieved
Measurable: An objective should be capable of measurement- so that it's possible to determine whether (or how far) it has been achieved
-Achievable: the objective should be realistic given the circumstances in which it's set and the resources available to the business
-relevant: objectives should be revalant to the people responsible for achieving them
-Time bound: objectives should be set with a time frame in mind. These deadlines also need to be realistic
the Hierarchy of objectives in business
1) mission
2) corporate and strategic
3) functional
4)Team
5) individual
1st is at the top of the pyramid and 5 is at the bottom
an example
corporate example : increase market share
An example of functional objectives:
-successfully launch five new products in existing markets over the next 2 years
Mission statement
the mission statement
the overriding purpose of the business
the reason for it's existence
A strategic perspective
-A supports the stated "vision" for the future
A mission statement is not:
statement of goals or objectives
statement of core values
-a statement of how the business intends to compete or position itself in the market
The mission statement when you look at the different levels in which the business sets it's objectives is that the mission statement is second to the top. Its the reason to why the business exists.
The key audiences of the mission statement include:
employees
-customers
-investors
-society
What makes a good mission statement
a clear sense of business purpose
-excites, inspire, motivate and guides
-easy to understand and remember
-differentiates business from competitors
-for all stakeholders- not just shareholders and managers
common criticisms of mission statements
not always supported by the cation of the business
-often too vague and general
-often merely statement of the obvious
-Are they just PR
sometimes regarded cynically by the staff
-To be effective, everyone in the business has to "buy-in"
business costs
costs are the amounts that a business incurs in order to make goods and or providing services
Costs are important because they
are the things that drain away the profits made by a business
-Are the difference between making a good and poor profit margin
-Are the main cause of cash flow problems in a business
-change as the output or activity of a business changes
key distinction: variable and fixed costs
-variable costs: costs that change as output varies
however, fixed costs which do not change when output vary
examples of variable costs
raw material
-bought- in stocks
-wages based on hours worked or amount produced
-Marketing costs based on sales(e.g. % commission)
examples of fixed costs
-rents& rates
-salaries
-advertising
-insurance, banking & legal fees
-software & IT services
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