3. Corporate Objectives and Strategy

Key Words
1. Corporate Objectives: company-wide goals that need to be achieved to keep the business on track to achieve its aims
2. SMART: Specific, Measurable, Ambitious, Realistic and Timebound
3. Corporate Strategy: provides a medium- to long-term plan for meeting the objectives
Corporate Objectives for PLCs
1. Maximising Shareholder Value:
  1. Profit maximisation
  2. Means taking actions that maximise the price of the organisation’s shares on the stock market
2. Growth:
  1. Making an organisation larger
  2. Business can achieve full potential
  3. Help defend firms from takeover bids
  4. Vision of 'being number one'
3. Diversification:
  1. Spread risk (reduce dependence on one market)
  2. Very difficult to achieve successful diversification, yet reduces business risk if it is successful
  3. Two main risks: won't understand customer as well as previously and marketing strengths (brand name and existing distribution channels) may no longer apply
4. Profit-satisficing - achieving 'enough' profit rather than the maximum. Chief executive may worry that short-term profit gains may hit longer-term security. So leaves scope for growth in coming years and can decide on other objectives i.e diversification
Corporate Objectives any Business might adopt

Resource summary

	Created by charcrawford over 10 years ago