4.3.1 Corporate Objectives

Key Terms

Corporate Objectives: Are Corporate Objectives + Corporate aims, refer to business as a whole. To work they have to be practical and effective e.g. relating to Market Standing, business reliability, Survival and profitability.

They are specific, realistic and measurable goals organisation plans to achieve within a period of time. These goals will influence internal strategic decisions.

Corporate Aims: are the very broad, long term ideas as to how the business should develop. Stated or Unstated, rather vague. Example, be profitable and have financial success or more specific e.g. To improve quality, reputation or expansion overseas etc.

Mission Statement: Are Inspirational and motivational versions of the corporate aims They should be short, specific and relevant and can be used to change customer perceptions of the brand, the value of the brand and encourage employees to focus on issues of costs and quality.

Mission Statements +ve/-ve

YES - Can increase Staff Motivation and can give staff a sense of common purpose and direction

- Can shift customer perceptions of brand and inform them

- Can let stakeholders understand central aim of business

NO

- Can be seen as cover up for an unethical business/Green Washing/ may not implement ethical behavior in business

- Hard to improve

-Impossible to sum up a whole business in a few sentences.

May be rather vague

-

Strategy: Are the detailed methods which are used to fulfill the objectives. Strategies cannot be made until the objective is defined.

Hierachy of Objectives

Aims, Objectives, Strategies, Departmental objectives, Team/Individual Objectives.

SMART Objectives: is an acronym used to describe how objectives should be realistic.

S - Specific - be detailed so all can understand the objective.

M - Measurable - include aspects of data which can be quantified to measure progress.

A - Achievable - It has to be realistic, no point setting a objective which is hopelessly optimistic and almost impossible to achieve.

R - Relevant - Objectives need to be relevant to the business this is why research and looking into alternative objectives need to be done to see which objective would achieve the best results to achieve the business aim.

T - Time - Putting a period of time in the objectives e.g. in 5 years dominate the UK cupcake market, it will make the objective more specific and effective.

Stakeholder interests and conflicts:

Stakeholders - Anyone with an interest in the business activities.

Customers - Customers want good value for the money, innovation, low prices and great customer service.

Conflict with shareholders/managers as customers want products cheaper, possibly less profit.

Employees - Want good pay, best benefits package possible and good working conditions, also may want promotion/title/responsibility within business.

Not always space to promote, not everyone can get promoted and also good pay, reduce profitability (Shareholders)

Managers - Want long term success for the business.

Shareholders generally interested in short term success, paramount objective to make profit. Whereas, manager wants long term as its their job and have realized that long term success means behaving ethically but this can be costly. This could mean managers want to spend more profits to behave ethically, can be negative shareholders.

Shareholders - Want Profitability for increase in shareholder value and dividends.

They can divert funds away from investment for long term growth.

Suppliers -maximize profits and gain preferential treatment

But business may want to minimize costs and negotiate extended trade credit.

Local Community - Want a good environment in local area not affected by business activity e.g. pollution from factories, unattractive views which can bring down property value, the removal of greenfield sites, noise/traffic congestion and carbon footprint.

Can halt business plans of development/expansion or building, costly, until decided by government. And can also bring unnecessary media publicity to the business portraying them as unethical. As they want ro preserve way of life.

Pressure Groups - Are a group of people share strong views on a particular issue. E.g. bird watchers. They want views to be heard and for environment/habitats not be affected.

Government - Want more people in employment, to increase TAX revenues to therefore increase Gov Spending to improve society. May impose regulations on businesses to do so.

If taxes are too high or the regulatory burden becomes excessive businesses may be RELUCTANT to reinvest or RE-LOCATE somewhere else.

Profit Based vs Ethical objectives:

Business Ethics - Is whether an individual or group of peoples behavior in business is deemed as morally right or wrong. Right is by following codes of business practice.

Corporate Social Responsibility - Is a very broad term, it means taking all shareholders into consideration and refers to the companies behavior as a whole and its obligation to make a positive impact on society.

Being ethical

Increase Costs to monitor and implement this behaviour but it can be argued to be cheaper than having to get outside regulation costly in long run. Despite costs rising due to ethical behavior, many are ethical and still profitable. Ethical behavior can also increase motivation and enhance leadership.

Many consumers care about ethical behavior and affects their buying decision. Ethical behaviour can sometimes be seen as green washing. Relying of profits paramount is short term.

-UNSUSTAINABLE RESOURCES CHEAPER AND CUT CORNERS BEING UNETHICAL CHEAPER.

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Revision for EDEXCEL A2 BUSINESS 4A