A2 1 - Business Objectives, Corporate culture and Stakeholder objectives

Corporate image

Advantages

• Enhance company’s internal and external image - increase market share

• motivational

• attract high quality workforce

Disadvantages

• Use up valuable resources

• No guarantee to increase market share

Profit maximisation

Advantages

• Opportunity to yield max reward for shareholders

• keep investors happy - dividends

• motivate - job security

• surplus reinvested - increase market share

Disadvantages

• cost-cutting - quality may suffer

• redundancies - negative corporate image

Green objective

Advantages

• attract customers - positive corporate image

• responsible and caring - increased investment

• competitive edge

• qualify for grants - ethical - attract good staff

Disadvantages

• significant R&D costs

• higher consumer prices

• time to conduct audit and draw up policy

Growth

Advantages

• secure future prospects of the firm

• diversification - minimise chance of failure

• motivation increases - increased sense of job security - chance for promotion

Disadvantages

• diseconomies of scale e.g. communication

• not possible in current economic climate

• strategy may fail - takes place too quickly

Survival

Advantages

• may be essential in current economic climate

• shareholders welcome cautious approach - have invested money into the business

• more cost-efficient

  Disadvantages

• rather than focus on domestic market survival - concentrate efforts abroad - enter new markets

• can be demotivating for staff - feel job is under threat

• miss out on opportunities abroad

mission statement

Benefits

• motivate staff - achieve objectives set out

• useful to attract positive publicity

• management focus on main purpose

Drawbacks

• inability to relate it back to decision-making process

• negative publicity if fails to meet goals

• existence of alternative motive by management - different to stated

Factors influencing business objectives

• external pressure - introduction of legislation

• age of firm - young - survival

• size and status of firm

• changes in external environment - economic conditions

Importance of corporate culture

• active participation of staff - opportunity for 2 way communication - express opinions and involved in decision making process

• Enhanced public relations

• More informed decision making process

• Motivational - staff may be motivated - they feel valued

Factors influencing corporate culture

• external environment

• size and development stage of the business

• leadership and management style

• organisational structure - policies and practices

Changing corporate culture

Benefits

• Provide a sense of identity - motivational

• Improve industrial relations

• help management strategies the way forward

Issues

• personal differences between management and staff - difference in training and experience

• staff opinions and behavior must be considered for effective change

• change of manager

HANDY - PERSON Culture

Professional organisations

Business full of staff of similar training, background and expertise

Power lies in each group of individuals

DEMOCRATIC

HANDY - ROLE Culture

Found in well-established businesses where rules have increased as business has grown.

Clearly delegated authorities within a highly defined structure

Hierarchal Bureaucracy

Power derives from a person’s position

AUTOCRATIC/PATERNALISTIC

HANDY - POWER Culture

Found in smaller entities

Control radiates from the centre

Concentrated power among a few individuals

Few rules and little freedom

Entrepreneurial or innovative businesses where speed of response to changing environment is vital.

HANDY - TASK Culture

Found in cross-functional teams of a firm where staff operate in teams to achieve objectives

Power derives from expertise as long as the team requires expertise.

No single power source

Matrix organisation

DEMOCRATIC/PATERNALISTIC

Conflict strategies examples

• negotiation

• improving communication

• arbitration - ACAS

• satisfying

• consideration of shareholder concept