Corporate Aims and Objectives
Corporate Aims: Overall aims of the company
Corporate Objectives: How these aims are going to be achieved, SMART
"Targets which the business adopts to achieve its primary aims."
Objectives are used to:
- implement the mission
- clear focus for decision making
- provide a target
- motivate employees
- prvide criteria for evaluating performance
Mission Statement: shows a clear understanding of the overall purpose of the business
- used to tell stakeholders what the company is doing
"A qualitative statement of an organisations aims. It uses language to motivate employees and convince customers, suppliers and those outside the firm of its sincerity and commitment."
Problems of mission statements:
- May be part of a public relations strategy
- may not provide a clear signal as to how the purpose, values and strategy should guide employees' standards and behaviours.
- need to match what's happening within the company.
Corporate strategies: What the business wants to achieve
- BoD plans these but they have an impact on the entire business
- Deciding which markets and activities the business should be involved in; where it wants to be; and how it will get there.
- making decisions about: satisfying customers; running the business; beating competition and achieving corporate objectives
Can be strategic (long term, high risk, set by BoD) or tactical (short term, set by management, lower risk)
Factors that influence corporate strategies:
- ownership (structure)
- leadership styles
"The process of drawing up objectives and a mission statement and devising a plan of action of how these objectives will be achieved."
Planning process: setting objectives -> determining what should be done -> implementing plan -> monitering/evaluating results
- Strategic plan -> overall direction for the business
- corporate plan -> the actions a business will take
- Operational plan -> how overall objectives will be achieved
Top down planning Bottom up planning
- Decisions made at the top - involves all level of management
- lower level managers have little input - ensures all issues are considered
- plans are passed down
Corporate aims -> mission statement -> corporate objectives -> corporate strategy -> department/functional strategy (internal and external) -> individual strategy
Keep all stakeholders informed with good communication
Potential stakeholder conflicts:
- staff + shareholders -> wages and profits
- opening hours + local community
- housing developments
Example of stakeholder conflict: Banking crisis
Northern Rock - almost out of business so nationalised - had bought lots of American debt and wasn't paid back
- Shareholder interests:
- Customers - losing all savings
- Other banks - had they lent to Northern Rock? Customers started to leave all banks
- Employees - job security
- international banks
- Government - system collapse?
- Total level of spening
- Employment and unemployment levels
- investment levels
- prices - 2% inflation target
- Interest rates (set by BoE) and exchange rates
Interest rates -> cost of borrowing or return on investment
Exchange rates -> strength of one currency against another
"Economies characterised by low to middle income GDP per head."
The key features of emerging markets:
- Economies making a transition (from developing to developed)
- Repid industrialisation
- Have potential to become developed countries
- Faster ling-term economic growth
- many inhabitants still in poverty, though a growing middle class
- Domestic businesses struggle across global markets (trade barriers)
BRIC economies - Brazil Russia India China
Issues to evaluate with emerging market economies:
- Political uncertainty and instability
- cyclical variations in economy
- Environmental and ethical issues
- legal protection for business patents, copyrights, and trade names may be less effective in developed countries.
- Globalisation is arguably the most important factor currently shaping the world economy
- Expansion in free trade
- Tariff - tax put on imported products
- Quota - a physical limit on the quantity of imports of certain products
"The process through which an increasingly free flow of ideas, people, goods, services and capital leads to the integration of economies and societies."
Features that have an impact on business strategy
- increased international trade - both threats and opportunities
- growht of mulitnational businesses in all countries
- development of global brands such as Starbucks, Nike, Sony, Google
Business Factors causing globalisation
- Barriers to international business are lower and falling
- Governments encourage domestic businesses to expand overseas
Pros and Cons of Globalisation
- Greater opportunities for selling goods in other countries
- increased competition gives firms the incentives to become more internationaly competitive.
- Pan-European or pan-global marketing strategies can be used to create a global brand identity.
- Wider choice of locations - the opportunity to set up operation in other coountries and become a multinational.
- Greater freedom to arrange mergers and takeovers with firms from other nations
- Businesses from other countries have freer acess to UK markets - greater competition
- The drive for international competitiveness will also be forcing firms to be more efficient
- Pan European/global strategies can fail to consider the culture and taste differences
- International locations lead to significant transport and communication problems
- UK businesses increasingly subject to foriegn takeovers (Land Rover & Tata Motors)
- Governments have less influence on business decisions
Government economic policy
The four main areas to consider are:
- Economic policy objectives
- Monetary policy
- Fiscal policy
- Supply-side policy
Monetary policy - the aim is to keep macroeconomic stability in the economy and also maintain the value of money - controlled by the Bank of England
Fiscal policy - use of government spending, taxation and borrowing to affect the level and growth of demand, output and jobs.
Government spending - transfer payments (welfare payments made to benefit such as Jobseekers allowence), current spending (spending on state provided goods eg schools), and capital spending (infrastructure spending such as new roads, hospitals, motorways, prisons).
Supply side policy
Designed to help improve the supply side of the economy.
They are designed to:
- improve incentives for people to get jobs
- increase business productivity and efficiency
- make it easier for the unemployed to find work
- increase the level of capital investment and R&D spending by firms
- stimulate inflows of overseas capital investment
- promoting more competitive markets
- stimulate a faster pace of invention and innovation throughout the economy
- Provides the platform for long term growth
- More productivity - better living standards
- Allows the economy to grow without inflation
- More competition - lower prices
- Makes the UK more competitive in global markets
- Increased tax revenues to fund state spending
Government intervention and legislation
UK - mixed economy, both private and public businesses
Cuba & China - command economies - very controlled by the state, high government intervention
USA - Laissez Faire - private enterprises - capitalist
Government intervention policies:
- Regional policies
- Monetary policy
- Fiscal policy
Privatisation - state run industries and state owned assets
Why intervene? To encourage growth, to control and reduce inflation, to maintain a satisfactory level of employment, to achieve a balance of payments, to maintain a stable exchange rate.
Main roles of legislation:
- regulate the rights and duties of people carrying out business in order to ensure fairness
- Protect people
- ensure treatment of employees is fair and un-discriminatory
- Protect investors and creditors
- regulate dealings
- ensure a level playing field for competing business
Five areas of legisation:
- health and safety
Two types: individual employment & industrial relations
Pay - fair amount of fair £5.80 22 years +
Discrimination - it's illegal to discriminate an employee on the basis of: sex, disability, age, religion, beliefs, status, marital/civil partnership status, race.
- Reasonable notice before dismissal
- Right to redundency
- Right to a written employment contract
- right to request flexible working
- Right to be paid national minimum wage
- Right to take time off for parenting
Consumer protection limits what businesses can and can't do. They may need to produce more carefully to avoid making dangerous products. This may mean they have to spend more time and money understanding all the rules and regulations, and abiding by them.
The complexity of products has increased so many consumers won't understand all they are buying.
Three main protections:
- Goods must fit their description
- Goods must be satisfactory quality
- Goods are fit for the purpose specified
Although consumers need to be protected, this will increase business costs.
- emissions into the air
- Strorage, disposal and recovery of waste
- Storing and handling hazardous substainces
- Discharges of wastewater
Being environmentally friendly means a good reputation which will attract more customers - smaller packaging - reduced costs
But can come with some costs for certain equiptment, and it may just be done for marketing.
Businesses have an impact to the environment and they are aware of their responsibilities towards trying to reduce any negative impact.
Cost benefit analysis - a method used for large projects that're likely to have an impact on the environment - involves costing all aspects of a project and weighing up the financial and external costs and benefits. If the benefits outway the costs then the firm should go ahead with the project.
Corporate Social Responsibility
CSR is conducting business in an ethical and moral way in the interests of the wider community. Responding positively to emerging social priorities and expectations, its about being a good citizen in the community and its about balancing interests of stakeholders.
The main aims of competition legislation are:
- Wider consumer choice in markets for goods and services
- Encouraging and protexting technological innovation
- Effective price competition between suppliers
- Investing allegations of anti-competitive behaviour within markets which might have a negative effect on consumers
Abusing a dominant market position:
- unfairly exploiting market positions
- If a business has a market share of 50%, then it is assumed to be dominant. This isn't a breach of the law, but if they impose unfair trading terms, excessive, predatory or discriminatory pricing, or refusal to supply or provide access to essential facilities.
- MICROSOFT - WASN'T ALLOWED TO SELL AS A PACKAGE WITH THEIR OFFICE AND INTERNET EXPLORER AS THEY WERE TOO BIG
Health and Safety
Health and safety is about preventing people from being harmed at work or becoming ill, by taking the right precaustions and providing a satisfactory working environment.
Health and safety legislation aims to protect:
- employees working at the business premises, from home or at another site
- Visitors to the premises such as customers
- People at other premises where the business is working
- Members of the public
- Anyone affected by products and services the business designs, produces or supplies