Business Studies                                                                                               

We are happy to adapt to the syllabus that suits you, but these notes are from AQA Unit 3 and 4. They provide a good introduction to someone considering Business Studies


This lesson has a significant degree of overlap with unit 3 material

 

Unit 4 Understanding mission, aims, objectives and strategies

 

Aims are the general long-term intentions of a business

 

Why do aims and intentions matter?

 

Aim is general: something that cannot currently be measured.

e.g. a good reputation in 10 years time can’t be measured

 

To intend is to looking after your inner or private thoughts and existence. It is a matter of the heart.

 

You cannot measure what your reputation will be like in ten years time. But you can intend it to be good. What you intend today will bring forth the fruit of tomorrow.

 

A business must have integrity. This means what it is in public must hold together with what the people in the business are in private. This way customers are getting the real person and the real deal.

 

This area of the business may often be related to the Christian beliefs of the owners. In a famous book, ‘The Protestant ethic and the spirit of capitalism’ Weber noted a distinctive connection here. Jesus himself spoke of the importance of looking after the intentions of the heart in the parable of the sower in Mark 4.

 

e.g. Branson – family and business connection. (Positive example)

       Tony Hayward of BP and yachting. (Negative example)

 

Corporate aims are realised by mission statements.

 

Mission statements e.g. BA

 

‘the world’s favourite airline’ changed to ‘the undisputed leader in world travel’. The first of these has a good ring to it and is realistic. The second doesn’t have the same ring as the first and could be understood as slightly arrogant. Although this may not be the intention.

 

Objectives are goals or targets that have to be met to realise the stated aims of an organisation. These tend to be medium to long term.

 

Strategies are the short to medium term plans of a business through which objectives are achieved.

 

Strategy cannot be considered until the company’s corporate and functional objectives have been agreed, since they form the basis of the strategy.

 

Corporate and functional objectives.

 

-Recall organisational structure diagrams from AS: Hierachical and functional

-Delayering can benefit the running of the company

-Meaning of corporate and functional:

 

Corporate is the company as a ‘body’ or as a whole. The best analogy of a company that holds together is the human body.  Not a hierarchy, but members in a body.

 

Functional relates to the departments of the organisation each with a separate purpose e.g. HR, Finance, Operations & Marketing in a functional structure. Functional objectives are the means by which each department in a company achieve its objectives.

 

-Example from HP- see fact file sheet

 

Questions:

 

What difference do you think having a list of corporate, functional and strategic objectives would make?

 

How corporate and functional objectives fit together

 

Functional objectives must be related to corporate objectives. Why? Because a business must be able to work in departments as well as a whole company. How a company understands itself as a whole is very important and will enable it to carry out the various functional objectives with an overall view.

 

Companies depending on their size may have different corporate and functional objectives.

 

e.g. This is how the c. and f. objectives may work together:

 

  1. Survival

 

Minimum level of sales and sales revenue

Appropriate levels of stock

Required no. of staff

 

  1. Profit maximisation

 

Effective marketing

Improving profit margins by minimising costs

Utilising capacity

 

  1. Growth maximisation

 

Increasing market share

Retaining profit

Increasing capacity

Improving training provision

 

  1. Diversification

 

Development of niche markets

Raise new finance

Achieving economies of scale

Effective communication

 

Relationship between functional objectives and strategies

 

Objectives may vary according to type of business.

Objectives, if serious make me think how am I going to achieve this?

Use the diagram to show how functional objectives are there to meet corporate objectives.

 

Corporate view understands the whole company and can co-ordinate the various departments.

 

Objectives have to be set before plans can be developed to meet them. These formulations are known as strategies.

 

Strategies are how the objectives will be achieved.

 

These will be discussed in detail later. But some examples:

 

e.g.

 

1. Corporate objective: increase rate of growth of business

 

Functional objective: increase market share

 

Marketing strategy: lower price/promote through improving presentation

 

 2. Maximising profits

 

Minimise costs

 

Financial strategy: introduce zero budgeting

 

3. Maximising leisure time

 

Decrease working time

 

HR strategy: Tighten deadlines

 

4. Corporate objective: To take good care of our staff

 

Functional objective: improve labour turnover rate

 

Strategy: motivational techniques