Business Revison Notes 1AS.4

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Business Revision Notes: 1AS.4
Business Objectives
Business objectives in the private and sector public
sectors:
The Nature and importance of business objectives at corporate,
departmental and individual levels :
Almost all aspects of human activity are made clearer and more focused if there is a
distinct objective to aim for.
A Business aim help to direct, control and review the success of business
activity
For any aim to be successfully achieved, there has to be an appropriate
strategy to ensures that resources are correctly directed towards the
final goal
The strategy should be constantly reviewed to check whether the
business is on target to achieve its objective
Objectives and strategies will change over time to suit the environment
The most effective business objectives usually meet the follow `SMART' criteria:
S Specific
M Measureable
A Achievable
R Realistic
T Timely
Specific
Concrete, solid objective
Use action verb
Should focus on what the business does
Apply directly to the business
Specific objective: A restaurant may set an objective of 2 million
dollars sales turnovers in 6 months.

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Measureable
Numeric or descriptive
Quantity, quality and cost
Quantitative
Quantitative value prove to be more effective for staff and directors to
work towards
Measureable objective : Nike will increase the sales of tshirts by 10%
over the previous year
Achievable
Feasible
Appropriately limited in scope
Within your control and influence
Impossible objectives will demotivate staff and the business activity
to be stall
Achievable objective: Increased sales to $3000/month than $3
billion/month
Realistic
Objectives should be realistic when compared with the resources of
the company
Include…read more

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Business Objectives (Public vs Private)
Public : primarily driven to offer quality services such as health care and
education
Private : driven to make profit through providing goods and services
that meet consumer wants
Corporate responsibility as a business objective
Business that consider the interests of society by taking responsibility for
the impact of the decisions and activities on customers, employees,
communities and the environment
Example:…read more

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Should business implement CSR?
YES, Reason: Can avoid influential pressure group, motivate staff and
increase brand image…read more

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Business should implement a wider perspective when setting objectives
and not be profit driven only
Relationship between mission statement, objectives, strategy
and tactics
Mission Statement: a statement of the business's core aims, phrased in away
to motivate employees and to stimulate interest by outside group.…read more

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Mission statement limitations:
Too vague and general, not specific about the business or its future
plans
Based on public relation exercise to make stakeholder groups `feel good'
about the organization
Not impossible to analyze or disagree
Unfocused and general, 2 completely different businesses can have a
similar mission statements.
Objectives: overcome the lack of specific detail for operation decisions by
stating GOALS or TARGETs which can be broken down into strategic
department targets. They can be based on the mission statement.…read more

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Different stages of business decision making and the role of
objectives in the stages of business decision making
Profit Maximization
Profits are essential for rewarding investor in business, a key objective
However there are serious limitations with this corporate objective such
as
Focus on high shortterm profits may encourage competitors to
enter the market
Many business seek to maximize sales rather than maximize profit
because it secure the greatest possible market share
The owners of smaller businesses maybe more concerned with
independence and control issues…read more

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Sales growth might be achieved at the expenses of lower profit
margins
Larger business can experience diseconomies of scale
Using profit to grow can lead to lower shortterm returns to
shareholders
Growth in to new business area can lose focus, direction of the
whole organization.…read more

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How objectives might change over time
1. A new formed business may have satisfied the `survival' objective by
operating for several years, and now the owners wish to purse objectives
of grow or increased profit
2. The competitive and economic environment may change, so the entry
into the market of a powerful rival or the start of an economic recession
may lead a firm to switch from growth to survival as its main aim.
3.…read more

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Corporate Objectives relate to the whole organization
They must be broken down into meaningful targets focusing on
divisional goals
Divisional objectives then become department objectives
Targets are given and budgets allocated to reach those targets
The communication of objectives and their likely
impact on the workforce:
Management objectives: a method of coordinating and motivating all
staff in an organization by dividing its overall aim into specific targets for
each department, manager and employee
If communication with discussion and agreement is done at each level of…read more

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