Chapter 6- Different stakeholder objectives and mission statements

Question 1

What does the business need?

Answer 1

• Some sort of target or sense of what it wants to achieve

Question 2

What is having a clear idea of a businesses intentions important for?

Answer 2

• In providing a target
• Will enable all who work in the business to be aware of where the business is hoping to go

Question 3

How can a company’s intentions be analysed?

Answer 3

• In terms of it’s mission statement, it’s aims or goals and its strategic and tactical objectives
  (They form a. Hierarchy of objectives)

Question 4

Mission statement

Answer 4

• It gives a general idea of what the business exists to do and its purpose is to set this down for the benefit of all stakeholders
• Statement is intended to appeal to employees and customers alike
• It is a qualitative statement which contains no specific elements
• Can be used as a form of marketing
• It will usually state the overall organisational or corporate aims of the business

Question 5

Aims/goals

Answer 5

• More specific than a mission statement
• Sometimes confusingly used as alternative terms for the main objectives of the business

Question 6

What principal aims do most businesses have?

Answer 6

• Survival: for a new business this is the most important aim especially if its a new business trying to compete with well-established companies
• Breaking even: Not likely that a business will be profitable straight away. There are many costs to cover especially those of the premises and all the fixtures (fixed costs or overheads. So it is more realistic to set a target of breaking even within a given time period
• Share of the market/growth: Much depends on the type of business and the market in which it operates. Capturing a larger share of the market not only increases sales with all the benefits that follow, but also puts the business in a position from which it can try to dominate the market
• Profit: Longer term goal than survival. The ability to make a profit depends on the type of products/services offered by the business and the amount of competition in the market place

Question 7

Hierarchy of objectives

Answer 7

• One way of looking at objectives is to see them as part of a hierarchy for the business. Of moving itself forward

Question 8

What will the hierarchy involve?

Answer 8

• The mission or overall purpose of the business
• It’s vision and where it wants to be in the future
• The aims the business has for achieving its mission and vision
• The objectives that are to be put in place to achieve all of this

Question 9

Strategic objectives

Answer 9

• How a business plans to achieve its aims or goals; often a long term approach
• In order to achieve its main aims, a business adopts a plan that contains several strategic objectives
  E.g. a businesses aim is to achieve a 10% growth in sales within 3 years so to reach this goal a business may decide that its strategic objectives are to
• sell its products in new markets
• Increase productivity within the business in order to reduce costs and thereby increase sales via lower prices

Question 10

What must a business undertake before deciding on the most appropriate strategic objectives?

Answer 10

A SWOT analysis and will help the business to decide the best way forward in order to achieve its aims

Question 11

Tactical objectives

Answer 11

• The day-to-day (short term) objectives needed to ensure strategic objectives are achieved
• Likely to be concerned with the day-to-day activities of the business
  E.g. the business may want to advertise and merchandise its products in a chosen area within six months. It may also decide that the best way of achieving the strategic objective is to reduce its prices in these new markets

Question 12

SMART (acronym)

Answer 12

Specific
Measurable
Agreed
Realistic
Time-bound

Question 13

Specific

Answer 13

• It’s important that everyone understands what the target is

Question 14

Measurable

Answer 14

• Normally the objective statement should contain a type of measurement to ensure that success or failure can be ascertained

Question 15

Agreed

Answer 15

• Agreements between different departments makes it more likely that objectives will be achieved
• To be successful all departments need to work together in setting objectives and its also useful for stakeholders such as employers and workers to agree on the firms objectives

Question 16

Realistic

Answer 16

• This is to avoid employees becoming demotivated

Question 17

Time-bound

Answer 17

• Often there is a timetable specifying the period over which an objective is to be achieved.
• A time constraint aids measurement and tends to focus people’s minds

Question 18

Constraints

Answer 18

• The circumstances in which the business operates (the business environment) may hinder progress and in some situations may require a complete change in direction

Question 19

Internal constraints

Answer 19

• Lack of finance to meet the chosen objectives
• Poor communication within the business
• A conflict of interests between departments within the business
• An industrial dispute with the workforce

Question 20

External constraints

Answer 20

• Changes in the law that affect the operation of the business
• State of the economy
• Behaviour of competitors
• Opinions and behaviour of external stakeholders

Question 21

Objectives and stakeholder conflicts

Answer 21

• The constraints on a business mean that even when SMART objectives are set, those objectives are not automatically going to be achieved.
• Also SMART objectives doesn’t mean that all stakeholders are happy with those objectives or the manner in which they are going to be reached
• There a number of conflicts that can occur between stakeholders
• Those who believe in the stakeholder to business argue that taking into account the needs of all stakeholders when setting objectives rather than only one group (this will mean in the long run stakeholders will benefit)
• They say that concentrating on one group is counterproductive as it will alienate the others.

Question 22

Corporate objectives

Answer 22

• This mission statement gives an indication of the corporate objectives of the business but often in vague terms
• The aims/goals for the business are more specific and changes over time
• Such objectives give a sense of direction for the business and help to define the culture in which the business is organised and operates
• The corporate culture of the business is clearly linked to its corporate objectives

Question 23

Social objectives

Answer 23

• Greater desire to be seen as a business who cares
• Having a social conscience is also seen my many businesses as an effective marketing tool
• Being ‘green’ or environmentally friendly or offering sponsorship i the local community are all ways in which a business can satisfy its social objectives
• There are instances when the corporate and social objectives may conflict
• If one of the corporate objectives is related to profitability for its shareholders spending money on social objectives that add to costs and therefore reduce profits may not be appropriate for shareholders

Question 24

Changing objectives

Answer 24

• Overtime as circumstances change, businesses may need to adapt their objectives
• In particular a firms tactical objectives may alter, depending on priorities and circumstances in order to achieve both the implementation of the strategic plan and the firms main goals
• However only in extreme circumstances will the strategic plan have to be changed
• A business may have a plan in place to deal with such circumstances (contingency plan)

Question 25

Communications and objectives

Answer 25

- Businesses need to ensure that they communicate their objectives clearly to all stakeholders and that they adhere to their objectives - Miscommunication about objectives can have serious results - this method chosen to communicate the objectives, particularly a change of objectives will need to be chosen carefully - employees are likely to be resistant to change and new ideas will need to be explained carefully paying particular attention to the reasons for change - Miscommunication from employer to employee vice versa can quickly escalate into industrial unrest and lack of trust