Topic 1.3 BM - Business Objectives [All Subtopics 4/4]

[INCOMPLETE] All subtopics included for Topic 1.4: Vision and Mission Statements & Common Business Objectives & Strategic and Tactical Objectives & Corporate Social Responsibility (CSR)

What is a ‘vision statement’

What is a ‘vision statement’

inspiring or aspirational declaration of what an organization ultimately strives to be, or wants to achieve, in the distant future. This usually includes, or at least indicates, the organization’s core values. The vision statement is intended to act as a clear guide for key stakeholders when planning and implementing current and future corporate strategies.

What is a ‘mission statement’

a succinct and motivating declaration of an organization’s core purpose (why it exists), identity (who they are) and focus (what they do). It is, therefore, a written declaration that normally remains unchanged over time.

Difference between vision and mission statement

• Vision Statement:

  • Describes the long-term goals and aspirations of an organization.

  • Focuses on the future and what the organization aims to achieve.

  • tends to be a broad and abstract statement

• Mission Statement:

  • Defines the organization's purpose and primary objectives.

  • Focuses on the present and how the organization operates.

  • tends to be narrow and more specific.

What are business objectives?

clearly defined and measurable targets of an organization, used to to achieve its overall goals

2 Categories of factors that can cause the objectives of a business to change

1. Internal factors - those within the control of the organisation

2. External factors - those beyond the control of the organisation

Internal factors that can cause the objectives of a business to change

1. Corporate culture (the accepted norms & customs of an organisation) - firms with a flexible & adaptable organisational culture are more likely to have creative objectives that change over time

2. Type & size of organisation - any change in the legal status of a business entity is likely to cause a change in its objectives. with a separation of ownership & control (such as in the case of publicly held companies), various stakeholder objectives need to be considered including
   - managerial objectives (e.g. higher bonuses)
   - shareholder objectives (e.g. higher dividend payments from higher profits)

3. Private vs Public sector organisations - unlike most private sector firms, most public sector organisations do not strive for profit maximization, but to provide a service to the general public

4. Age of the business - newly established firms tend to have survival as their key objective, whereas established businesses might strive for growth & higher market share

5. Finance - the amount of available finance will determine the scope of a firm’s objectives (e.g. a large sum of money is needed if the business objective is to expand into overseas markets)

6. Risk profile - if managers & entrepreneurs have a relatively high willingness and ability to take risks, then more ambitious objectives are likely to be set (e.g. diversification strategies to enter new markets with new products)

7. Crisis management - businesses may face internal crises such as unexpectedly high staff absenteeism & labour turnover rates, falling productivity & motivation problems, liquidity problems or issues about quality standards

External factors that can cause the objectives of a business to change

1. State of the economy - (e.g. when national income & employment are high, provides many business opportunities whereas a recession, where unemployment is high and consumption is low, can threaten business survival)

2. Government constraints - some government rules & regulations can limit creativity & what a business might strive to achieve (e.g. environmental protection laws can limit the ability of firms to profit maximise due to the higher costs of compliance

3. The presence & power of pressure groups - pressure groups (e.g. environmental protection groups) can force a business to review its approach to ethics through their lobbying activities. pressure groups may also harm a company’s corporate image if it is not adopting a socially responsible & sustainable business approach to conducting business

4. New technologies - new tech & creativity can generate many new business opportunities, and thus change business objectives. innovation!!