Business Notes: Unit 4 Topic 1 Understanding Mission Aims and Objectives

The following post contains notes made the lessons covering the AQA Business Studies Unit 4 Topic 1: Understanding Mission Aims and Objectives.

Mission aims are general and illustrate the reasons why a business exists.

Aims are short to medium term targets usually covering a period of 2-3 years. They should be SMART (Specific, Measurable, Achievable, Realistic, Time Scale)

Strategy is a plan to help a business survive.

Tactics are short term measures to help achieve the strategy.

Strategy

Ansoff Matrix


Source: http://www.google.co.uk/imgres?q=ansoff+matrix&hl=en&sa=X&biw=1280&bih=539&tbm=isch&prmd=imvnsb&tbnid=LP7_pk0PnCoDfM:&imgrefurl=http://tutor2u.net/business/strategy/ansoff_matrix.htm&docid=_kjr66fgVqPl4M&imgurl=http://tutor2u.net/business/images/Ansoff%252520Matrix%252520w500.gif&w=500&h=375&ei=d5dHT5D7LIit0QW89e2xDg&zoom=1&iact=rc&dur=125&sig=114147510699688502570&page=1&tbnh=146&tbnw=211&start=0&ndsp=10&ved=1t:429,r:0,s:0&tx=144&ty=54

Porter Generic Strategy Model

Stakeholder Perspectives

A Stakeholder is an individual who has an interest in the business.

Examples of stakeholders and their objectives:

Customers: Good customer service, good quality product
Employees: Fair wages, job security, good working conditions
Shareholders: Make a profit
Competitors: Fair competition
Local Communities: Benefit
Suppliers: Good relationship, reliable
Directors: Make a profit, successful
Trade Unions: Ethical behaviour towards employees
Government: Pay taxes, benefit the economy, create employment

Other stakeholders include the media and pressure groups.

Stakeholder Conflicts

Employees vs Directors

Employees want higher wages -> this means the costs of the business increase -> this effects the profitability of the business -> which results in lower profits -> which will mean less rewards for the directors of the business

Shareholders vs Local Communities

Shareholders want as much money kept in the business where as locals want the money spent on the communities.

Suppliers vs Directors/Managers

Suppliers want prompt payment where as directors want to keep cash for as long as possible.

EXAMPLE:
Luton Airpot Expansion

The people who benefit are:

• Shareholders
• Government
• Managers/Directors
• Suppliers
• Customers
• Employees

The people who suffer are:

• Local communities (due to the noise and pollution)
• Pressure groups
• Trade unions

The stakeholders and their possible pressure on the Luton Airport Expansion:

Employees: may take industrial action or leave
Customers: may not purchase the product/ service, they may take their custom elsewhere to competitors, they may complain
Suppliers: may not give them the product/service, stop supplying
Shareholders: have the power to remove dirctors, can remove funds
Pressure Groups: May protest, can gain celebrity support, peition

Factors Influencing What Strategy is Chosen

• Finance available
• Market growth (situation of the market)
• Risk involved
• Technology
• Competition (extent and strength of)
• Corporate objectives
• Workforce (skills, experience and knowledge)
• Economic climate
• Stakeholder views
• Rewards involved

Reasons Why a Strategy Might Fail

• Strong competition
• lack of planning
• Rapid technological advances
• Recession - economic climate
• Bad finances
• Cash flow
• Lack of knowledge/ lack of market research
• Employee resistance

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