Business Studies AS Level: Chap. - 4: Revision Questions

What is the purpose of a mission statement?

A mission statement should be a brief description of a company's principals. The mission statement explains the reason why the company exsists & it's purpose both for those in the organisation & the public.

Explain, with two examples, what corporate objectives a car-manufacturing business could establish.

A car manufacturing business aims for growth; Must have a comeback by putting out cars that are more eco friendly & apply to teenagers. Moreover increase market shares by achieving profit maximization.

State four factors that would help to ensure that cooporate objectives were effective in assisting a business to achieve it's aims.

Four factors that would help ensure that cooporate objectives were effective in assisting a business to achieve it's aims are: - Size & legal form of the business - Corporate culture - The no. of years the business has been operating - Public/private-sector business.

What do you understand by the corporate objective 'increasing shareholder value'?

Increasing the value delivered to shareholders because of management's ability to grow earnings, dividends & share price. In this case, shareholder value is total strategic decisions that will affect the business's ability to increase the amount of free flow cash in a period of time and dividends paid to them. Priority is given to shareholder's interest.

Why might the objective of 'increasing shareholder value' conflict with corporate social responsibility?

Many corporations may lack the necessary means to fulfill with social responsibility if shareholder value is increased. It is more valuable to go green & be completely humane; therefore this may conflict with increasing their shareholder value.

What is meant by 'management by objectives'?

Once the divisional objectives has been established, then these can be further divided into departmental objectives, budgets & targets for individual workers. This process is known as 'management by objectives' (MBO).

Give an example of a SMART objective that could be set for your school or collage.

S - Specific M - Measurable A - Achievable R - Realistic & relavant T - Time specific ex: Increase the school's profit by 5 - 10% by the end of Dec. 2014 (or whatever year is next!)

Why might short-term profit maximization not be an appropriate objective for such a business?

Short-term profit maximization may not be appropriate due to the fact that it will not

Why might the owners/directors of a small private limited company set a 'profit satisficing' objective?

The owners/directors of a private limited company will prefer to have 'profit satisficing' objectives so that the owner(s) can be satisfied with their life and they get leisure time as well.

Using a business example from your own country, explain why its key corporate objectives might change over time.

A new business, like Sancta Maria Int'l school, may have been satisfied by the 'survival' objective for a few years, but now the owners may want to pursue objectives of increased profit or growth. However there is severe competition, which may change after a period of time, they would change back to the 'survival' objective.

What are often considered to be the practical limitations of mission statements?

The mission statement which is too informal and general, so that they end up specific about the business & it's future plans. Based on public regulation practices to have the organisation be satisfied by stakeholders.

Why should departmental objectives be coordinated?

To be able to reach a general goal; the smaller goals combine to create an extreme goal so that no department feels abandoned. The achievement of corporate depends on performance, of each department and each performance is interlinked with each other, so it has to be coordinated.