Using Objectives And Strategies

Question 1

Relationship between corporate objectives and functional objectives

Answer 1

1. Survival - min levels of sales and sales revenue, appropriate levels of stock and required no. of experienced staff
2. Profit maximisation - effective marketing - increase sales, Improving profit margins by minimising costs
3. Growth maximisation - increasing market share, retaining profit in order to finance growth
4. Diversification - development of niche markets, raising additional finance via appropriate and cost effective sources, achieving economies of sale

Question 2

Relationship between functional objectives and strategies

Answer 2

1. FO in marketing division might be to gas market share - contribute to the corporate objective of increasing the rate of growth of the business. MS - achieve this functional objective might involve lowering price.
2. FO in finance division might be to minimise costs - contribute to corporate objective of maximising profits. A financial strategy to achieve this functional objective might involve introducing zero budgeting
3. FO - in the operations division might be to improve economies of scale. An OS to achieve this FO might include centralised buying in bulk for, the same supplier.
4. FO in the human resource strategy division might be to improve labour turnover
   . A HR strategy to achieve this FO might be to improve motivational techniques.