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Questions and Answers
What aspect of a business's goals should be considered to ensure they can be evaluated effectively?
Which characteristic of effective goals indicates that they must fit with the company's broader objectives?
What is the primary function of a mission statement within a business?
Which of the following is not a characteristic of effective goals as described?
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What role do middle managers typically serve in relation to tactical goals?
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What is the primary focus of businesses classified in the tertiary sector?
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Which of the following is a characteristic of a capital-intensive production process?
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What is meant by 'added value' in a business context?
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Which business function is responsible for ensuring that sufficient funds are available for operations?
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What does the term 'target market' refer to in business?
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Which of the following is NOT a reason why entrepreneurs might start a business?
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What is the primary goal of market research in a business?
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Which type of business may utilize the term 'retained profit'?
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What is a common characteristic of business ventures in the primary sector?
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How is 'enterprise' defined in the context of business?
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What do the legal requirements for establishing a business typically involve?
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What aspect of production does the term 'production chain' refer to?
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Which of the following describes 'financial resources' in the context of business?
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What is the significance of having a unique selling proposition (USP) in business?
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What is the primary focus of operational objectives in a business?
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Which factor is NOT included in the definition of corporate social responsibility?
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What is the main purpose of SWOT analysis?
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What do business tactics primarily focus on?
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Which of the following is NOT a component of the PESTEL analysis?
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What is typically the main role of middle managers in a business?
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Which of the following describes economic changes as an external factor?
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What strategy involves focusing on new markets or segments within existing markets?
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What is the main purpose of the Ansoff Matrix?
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Which of the following describes a situation where stakeholders have conflicting interests?
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Which of the following is a key characteristic of tactical objectives?
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What is NOT a consequence of adopting ethical objectives in a business?
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What might indicate a need for a business to change its objectives?
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Which of the following represents a weakness in a SWOT analysis?
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Study Notes
Vision Statement
- Inspires and motivates employees
- Gives external stakeholders a sense of shared beliefs
- Expresses business’ core values
- Should never change
Goals
- What a company wants to achieve in general
- Achievable, tangible
- Long-term and unspecific
- Uses imagination and creativity
Mission Statement
- More specific than vision
- Explains why a company is doing what it is doing
SMART Goals Framework
- Provides an entrepreneur or CEO with a fair and measurable way to assess performance
- Specific: Clear, concrete
- Measurable: Can be tracked and evaluated
- Achievable: Realistic and attainable
- Relevant: Worthwhile, matches other objectives
- Time-based: Actionable within a define period
Tactical Goals
- Medium-short term
- Set by middle managers to achieve strategic objectives
Operational Objectives
- Focused on day-to-day tasks
- Set by managers and workers to achieve tactical objectives
- Define Key Performance Indicators
- Measures how successful the business is at achieving its vision
- May change to meet new circumstances
- Includes customers, products, services, markets, technology, concern for survival/growth/profitability, philosophy, self-concept, public image and employees
Ethical Objectives
- Based on moral principles
- Treat workers, customers, shareholders, and the environment responsibly
- Apply ethical values to targets and actions
- Help build customer loyalty, create a positive image, create a positive work environment, reduce legal redress risk, meet customer expectations for ethical behavior and increase profits
- Costs may rise in the short-term and employees may resist change
Business Strategy
- Plan to achieve a strategic objective that works towards the aims of the business
- Medium to long-term focus
- Decisions made by senior managers and approved by owners/CEO
- Focuses on careful analysis of the business
- Developing a plan to get to where the business wants to be
- Consideration of strategies to implement the plan
- Periodic evaluation process to determine whether the plan is working or has worked
Business Tactics
- Plan to achieve tactical objectives that work towards business strategies
- Short-term focus
- Decisions made by middle managers and approved by senior managers
- Easy to change
- Less closely tied to the long-term health of the business
- Focus on achieving measurable targets within the strategy
Reasons for Change in Business Objectives
- Internal Environmental Change - Leadership, human resources, organization, product, finance and operation changes
- External Environmental Change – Social, technological, economic, ethical, political, legal and ecological changes
Corporate Social Responsibility
- A business' concern and commitment towards sustainability and the development of society
- Ethical business practices
- Philanthropy, generous salaries, meaningful benefits, and a focus on doing more for the environment
SWOT Analysis
- Business analysis technique that identifies an organization’s internal Strengths and Weaknesses and external Opportunities and Threats for a business
- Helps the business know its current strategic position
- Aims to help decision makes share and compare ideas, bring clearer common purpose and understanding of factors for success, organize important factors linked to success/failure in the business world, analyze issues that have led to failure, and provide linearity to the decision-making process
Strategic Environments
- Internal - Man, Money, Machine, Material, Method, Market (6Ms)
- Internal - Strengths and Weaknesses, affected by external factors
- External - Political, Economic, Social, Technological, Environmental, Legal (PESTEL)
- External - Opportunities and Threats
Strengths
- Capabilities of an organization that give it an advantage over others
- Abundant financial resources, well-known brand name, lower cost, product/service efficiency, marketing skills, good distribution, committed employees
Weaknesses
- Factors which do not meet the standards, should be minimized and eliminated
- Limited financial resources, weak spending on Research and Product Development, poor products (out of date, narrow lineup), limited distribution, higher cost, weak marketing image, under-trained employees
Opportunities
- Opportunity in the macro or industry environments that can improve an organization’s competitive position relative to competitors
- Rapid market growth, weak competition, changing customer needs/tastes, new uses for a product discovered, economic boom, government deregulation
Threats
- External elements in the environment that could cause trouble for a business
- External factors beyond an organization’s control which could place their mission or operation at risk
- Entry of new competitors, introduction of new products or product substitutes, a decline in the use of a product, changing consumer needs/tastes, competitors adopting new strategies, increased government regulation, economic downturn
How to Conduct a SWOT Analysis
- Perform PESTEL and 6Ms analysis of the internal and external environment.
- Perform a SWOT analysis and document.
- Develop an action plan.
Who Needs a SWOT Analysis
- Management - Examining and identifying fresh targets, markets, and opportunities, evaluating the potential of a new product or offering and improving performance in current business operations
- Business Unit - Examine why targets are not met, find ways to improve customer service, launch a new product or pursue a new business.
- Company - When revenue and expense targets are not being achieved, market share is declining, or external environmental conditions are proving unfavorable
TOWS Analysis
- Pairs key factors from each quadrant of a TOWS matrix and adopts relevant strategies.
Growth Strategies
- Strengths-Opportunities - Combine strength with market opportunities, positive short-term strategies, pursue when confident there are no major issues in other areas, re-orientation strategies
- Weaknesses-Opportunities - Address weaknesses to use them for available opportunities, positive and long-term strategies, address weaknesses then re-orientate itself, defusing strategies
- Strengths-Threats - Eliminate threats by focusing on business strengths, not looking for new market opportunities but defusing the threats to focus on core strengths, neutral and medium/short-term strategies, defensive strategies
- Weaknesses-Threats - Adopted when a business is feeling vulnerable, act defensively and quickly, negative, short-term strategies necessary to help the business survive.
Ansoff Matrix
- Considers existing market and product options
- Existing Product – Existing Market, Existing Product – New Market, New Product – Existing Market and New Product - New Market
Market Penetration
- Business increases market share by selling more of existing products in the same market
- Safest option for growth
- Opportunities may be limited by competitors
- Promote brand loyalty
- Encourage repeat customers
- Lure customers away from competition
- Consider the growth potential of the market, strength of customer loyalty, power and ability of competitors
Market Development
- Looks for new markets or new market segments in the existing market
- Riskier, as the business may not understand new markets
- Requires effective market research, local knowledge, and effective distribution channels
Product Development
- Develops new products for the existing market
- Upgrades of existing products or variations on existing products
- Risky and depends on how loyal customers are to the original products
- Requires effective market research and a strong research and development system
- First-mover advantage in the market
Diversification
- Riskiest growth strategy
- Lack of familiarity and experience in a new market
- New product is untested
- Requires effective market research and due diligence (assessing the attractiveness of the market and the cost of entering the market)
- Requires recognition of the existing business
- Potential tie-ups with other businesses who have the necessary expertise
Stakeholders
- Any individual group or groups of individuals who have an interest in a business' actions because they are affected
- Can be an organization, business units, departments, groups or individuals
- Can have a direct financial stake or be members of the community in which the business operates
Market Stakeholders
- Have a commercial relationship with the business
- Customers, suppliers, lenders
Non-Market Stakeholders
- No commercial relationship with the business
- Media or community members
Primary Stakeholders
- Directly affected by, or are affecting, the business
Secondary Stakeholders
- Have an indirect relationship with the business
Internal and External Stakeholders
- Internal and external stakeholders can have gray areas
- Employees live in the community where the business is located; internal stakeholders as employees and external stakeholders as residents
- Individuals may have multiple stakeholder interests (e.g., employees who own shares)
Stakeholder Conflict
- Groups with common interests may have differences of opinion
- Any decision will elicit different reactions for different stakeholders
Stakeholder Analysis
- Identify and analyze stakeholders affected by a proposed action
- Specify who supports, resists or is neutral to the proposed action
Stakeholder Analysis Matrix
- Low Interest - Low Power - Minimal Effort - Keep Informed
- High Interest - Low Power - Keep Satisfied - Keep Informed
- Low Interest - High Power - Keep Satisfied - Key Players
- High Interest - High Power - Key Players - Key Players
Internal Stakeholders
- Individuals or groups working within the business
- Shareholders focus on the return on their investment
- CEO focuses on coordinating business strategy, delivering profits, and returns to satisfy the shareholders
- Managers/Supervisors focus on objectives assigned to achieve organizational goals and objectives
- Employees and unions focus on protecting their rights and working conditions
External Stakeholders
- Those outside the business
- Customers and consumers focus on the best product or service
- Suppliers focus on maintaining a beneficial relationship between themselves and the firm
- Financiers/Creditors focus on returns on investments and loans
- Government focuses on the conduct of the business in the business environment
- People in the local community focus on the impact of business on the various aspects of the locality
- Pressure groups focus on the impact of the business on areas of concern
- Media focuses on the impact of the business
- Competitors are considered stakeholders as they affect and are affected by the operation of a business
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Description
Test your knowledge on the characteristics of effective business goals and the role of mission statements in organizations. This quiz covers key concepts related to evaluating goals and understanding tactical objectives within a company. Dive in to see how well you understand these critical aspects of business management.
