SUMMARY (BUSINESS OBJECTIVES, STRATEGY, AND STAKEHOLDERS)

SUMMARY (BUSINESS OBJECTIVES, STRATEGY, AND STAKEHOLDERS)

Aims

These are the long-term goals that provide direction for setting objectives. They are often expressed in the form of a mission statement. A typical corporate aim might be 'to become Europe's number 1 car manufacturer'. From this aim, a company can set a number of objectives and targets, such as to increase the quality of its products, to improve productivity levels, or to increase the effectiveness of its promotional campaigns.


Contingency planning

This means preparing for unwanted and unlikely possibilities. A business may produce a contingency plan in case of:
1.a severe recession
2.an environmental disaster
3.a sudden strike by its workforce

Contingency plans enable a business to be in a better position to manage a crisis, rather than to try and simply cope with it when it occurs.


Corporate objectives

These are the goals of the whole company. These should be based upon the company's aims and mission statement. Each department should then set its objectives based on the corporate objectives. Examples of corporate objectives include:
1.to achieve long-term growth.
2.to diversify the range of products and markets.
3.to maximise profits.


Crisis management

This is the response of an organisation to a crisis (e.g. a fire, terrorist activity, natural disaster). Many companies will have some sort of contingency plan to cater for such situations, but it is rare that the actual crisis will go according to plan. It is likely that the person in charge at the time of the crisis will manage the crisis in a very authoritarian fashion, as he needs to make quick and effective decisions without the time for discussion and consultation with others.


Decision tree

This is a diagram that sets out the various possible options available to a business when it makes a decision (such as an investment) plus the probable outcomes that might result from each option. A decision tree also shows the likely probability of each option occuring and it sets out the likely amounts of money that can be expected at the end of each branch. Essentially, a decision tree shows the average amounts of money that are likely to be received if the decision was taken many times.


Mission statement

This outlines the aims of a business in an attempt to provide a sense of direction and shared purpose for the stakeholders of the business. It often states what the business has done, what it would like to do and the strategies that it will use to achieve its overall aims.


Objectives

These are the medium- to long-term goals and targets of a business. Objectives must be achievable and realistic if they are to be of any use to employees, since an unrealistic objective is likely to act as a demotivator to the workforce. Objectives need to be agreed through consultation with employees, rather than simply being set by the managers and Directors. This gives the employees a sense of belonging and responsibility - which is likely to lead to higher levels of motivation and job satisfaction.


Stakeholder

This is an individual, or a group of people, with a direct interest (financial or otherwise) in a business. The main stakeholders are employees, shareholders, customers, the government, suppliers, creditors, pressure groups and the local community. Each group of stakeholders is likely to want the business to achieve a different objective or to follow a different course of action. These differing opinions and views often, inevitably, result in conflict between the stakeholder group and the business.


Strategy

This is a medium- to long-term course of action, which will enable the business to achieve its objectives. The strategy would include what needed to be done, the resources required and the likely timescale involved.


SWOT analysis

This is an investigation into the strengths (e.g. high level of market share), weaknesses (e.g. high gearing), opportunities (e.g. new markets to break into), and threats (eg new competitors entering the industry) that a business is faced with at a specific point in time. Strengths and weaknesses are internal factors which the business has direct control over, while opportunities and threats arise from the external environment and are, therefore, more unpredictable and potentially dangerous.


"What if...?" questions

Before contingency planning can take place, a business must consider many possible threats and crises that it may face, in order to be able to react to them swiftly and efficiently if they do ever occur. These are often computer-simulated and they can predict to a high level of accuracy the likely effects of a crisis on the finances and resources of a business.