- Created by: Alissa_Zorina
- Created on: 11-06-17 10:11
Business Studies Revision ‘Booklet’ GCE WBS03 papers.
Mission Statement - a statement of purpose of existence of a business; why it exists?
Could consist of:
a.) Purpose - reason why business exists
b.) Values - what company believes in
c.) Standards & Behaviours - standards set by managers to show how staff is to be treated or interact with each other
d.) Strategy - medium-long term plans to make firms’ missions achievable
- Only used for public relations to show the firm in a positive light
- Doesn't last forever; can depend on change in market conditions
- Too general; say little about the business
- Gives a business a sense of direction
- Tells stakeholders what business exists for; tells customers what business does and therefore more possible business to the company
- Helps to motivate employees
- Helps firms to align the activists with their overall goals
Corporate objective - short term target that helps the firm to achieve its long term aims or missions.
- Specific - what exactly should be achieved
- Measurable - should be set in a way to assess whether the target is achieved or not
- Achievable - objectives should be easy to achieve
- Realistic - should be set considering availability of resources such as machinery, skills etc.
- Time - bound - should have a deadline
- Profit Maximisation - aims to achieve highest profit possible; may sacrifice its market growth
- Growth - expanding business internally and externally (long-term). Firm lowers prices to increase market share over short period of time
- Maximising Shareholders Value - increasing dividends and high share price to attract more investments
- Survival - work hard and break-even to stay in business
- Market Share - increasing the number of customers business serves to dominate the market
- Internal - within the business: employees, managers, shareholders/owners etc.
- External - outside the business: customers, government, pressure groups, community, suppliers etc.
Conflict of Objectives
- Shareholders might want good dividends but workers may want high wages which will increase costs and lower profit for owners
- Customers want lower prices but this may reduce profits
- If short- term objective is survival then risks should be avoided. If long term objective is growth then risks must be taken
- If a firm goes after market share it might have to reduce prices to undermine competition and hence profit maximisation won’t be possible over short period of time
Solutions to conflicts
- Writing policies - outline social and ethical stances
- Promoting the business - as being ethical and socially responsible through media
Corporate Social Responsibility (CSR) - responsibility of a company to all stakeholders, managing business that has a positive impact of society
CSR is about:
- Conducting business ethically and in a moral way e.g. no use of child labour
- Balancing interests of all stakeholders
- Acting as a good citizen by obeying laws
- CSR is about taking an action before required to do so by the law (self regulation)
- Acting morally and ethically reduces risks of having…