Unit 1- What is business?
Why business exist:
- To provide goods and services
- To develop a good idea
- To help and support others
- To make a profit
Mission statement:
The purpose of a mission statement is to help bring focus and meaning to a business and act as a
guide when making critical decisions that may affect the direction of a business.
- What an organisation is and why it exists
- The overriding goal of the business
- The reason for its existence
- A strategic perspective
- A vision for the future
What makes a good mission:
- Contains a formulation of objectives that enables progress towards them to be measured
- Differentiates the business form its competitors
- Is relevant to all major stakeholders
Common criticisms of mission statements:
- Not always supported by actions of the business
- Often too vague and general
- Sometimes not a true reflection of reality
Mission- A qualitative statement of the business’ aim
Aim- a long term plan from which business objectives are derived
Objectives- a target which must be achieved in order to realise the stated aim.
Business objectives:
- The specific intended outcomes of business strategy
- The anticipated end results of a programme of activities
- Targets which the business adopts in order to achieve its primary aims
Main functions of objectives:
- A clear statement of what needs to be achieved
- A focus for all activity
- Targets for individual and group achievement
- A means of measuring performance
How objectives can be used:
- Implement the mission
, - Provide a clear focus for decision making
- Provide a target
- Motivate employees
- Reduce uncertainty
- Provide sense of unity
How the hierarchy works:
The objectives cascade down from the mission getting progressively more specific. Objectives are
translated into more specific objectives for different parts of the business.
Corporate objectives are often stated in terms of:
- Profit
- Return on investment
- Growth
- Market share
- Cash flow
- Sales revenue
- Shareholder value
- Corporate image and reputation
Functional areas:
- Finance
- Marketing
- Operations
- Human Resource
SMART:
Specific- the objective should state exactly what is to be achieved
Measurable- an objective should be capable of measurement- so that it is possible to determine
whether it has been achieved
Achievable- the objective should be realistic given the circumstances in which it is set and the
resources avalible to the business
Relevant- objectives should be relevant to the people responsible for achieving them
Time- objectives should be set with a timeframe in mind. These deadlines also need to be realistic
Factors influencing business objectives:
- Age of the business
- Size and legal status
- Ownership
- Views of owners and managers
- Market conditions
- Legislation
- State of the economy
- Competition
- Risk and attitude to risk
Why business exist:
- To provide goods and services
- To develop a good idea
- To help and support others
- To make a profit
Mission statement:
The purpose of a mission statement is to help bring focus and meaning to a business and act as a
guide when making critical decisions that may affect the direction of a business.
- What an organisation is and why it exists
- The overriding goal of the business
- The reason for its existence
- A strategic perspective
- A vision for the future
What makes a good mission:
- Contains a formulation of objectives that enables progress towards them to be measured
- Differentiates the business form its competitors
- Is relevant to all major stakeholders
Common criticisms of mission statements:
- Not always supported by actions of the business
- Often too vague and general
- Sometimes not a true reflection of reality
Mission- A qualitative statement of the business’ aim
Aim- a long term plan from which business objectives are derived
Objectives- a target which must be achieved in order to realise the stated aim.
Business objectives:
- The specific intended outcomes of business strategy
- The anticipated end results of a programme of activities
- Targets which the business adopts in order to achieve its primary aims
Main functions of objectives:
- A clear statement of what needs to be achieved
- A focus for all activity
- Targets for individual and group achievement
- A means of measuring performance
How objectives can be used:
- Implement the mission
, - Provide a clear focus for decision making
- Provide a target
- Motivate employees
- Reduce uncertainty
- Provide sense of unity
How the hierarchy works:
The objectives cascade down from the mission getting progressively more specific. Objectives are
translated into more specific objectives for different parts of the business.
Corporate objectives are often stated in terms of:
- Profit
- Return on investment
- Growth
- Market share
- Cash flow
- Sales revenue
- Shareholder value
- Corporate image and reputation
Functional areas:
- Finance
- Marketing
- Operations
- Human Resource
SMART:
Specific- the objective should state exactly what is to be achieved
Measurable- an objective should be capable of measurement- so that it is possible to determine
whether it has been achieved
Achievable- the objective should be realistic given the circumstances in which it is set and the
resources avalible to the business
Relevant- objectives should be relevant to the people responsible for achieving them
Time- objectives should be set with a timeframe in mind. These deadlines also need to be realistic
Factors influencing business objectives:
- Age of the business
- Size and legal status
- Ownership
- Views of owners and managers
- Market conditions
- Legislation
- State of the economy
- Competition
- Risk and attitude to risk
