Using objectives and strategies-chapter 1

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  • Using Objectives and Strategies-Chapter 1
    • Corporate objectives
      • Targets set for whole company
      • Examples: survival, disversification, growth, profit maximisation
        • Survival-Functional objectives that will assist a business's survival might include minimum levels of sales and sales revenue, appropriate levels of stock and the required number of experienced or well-trained staff
        • Profit maximisation-Functional objectives that will assist a business in maximising its profits might include effective marketing in order to increase sales, improving profit margins etc.
        • Growth-Functional objectives that will assist a business that wishes to grow might include increasing market share, retained profit in order finance growth, increasing capacity by expanding the number of sites, recruiting more staff and improving training provision
    • Functional objectives
      • Goal set by each department (functional area) within a business such as the marketing or operations department
      • Typical functional areas and their objectives
        • Marketing e.g. Increase market share and brand popularity
        • Operations e.g Minimise costs, increase capacity utilisation, increase quality
        • HR e.g. Reduce labour turnover, reduce absenteeism, increase productivity
    • Strategy:the medium-to long-term plans through which an organisation aims to attain its objectives.
    • Objective:A specific and measurable goal set for the future
    • Relationship between functional objectives and strategies
      • A functional objective in the marketing division might be to gain market share  in order to contribute to the corporate objective of increasing the rate of growth of a business
      • A functional objective in the marketing division might be to gain market share in order to contribute to the corporate objective of maximising profits. A financial strategy to achieve this functional objective might involve introducing zero budgeting
      • A functional objective in the operations in the operations division might be to improve economies of scale. A operational strategy to achieve this functional objective might include centralised buying in bulk from the same supplier

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