Section I
Explain one purpose of a mission statement.
- It identifies core aims
- Motivates employees as they are associated with the positive qualities the statement refers to
- help establish what the business is about
Explain one limitation of a mission statement.
- too vague and general - cannot be used as actual targets
- they are just a public relations exercise to make stakeholder group feel good about the organisation
- virtually impossible to really analyse or disagree with
- too general and lacks specific details - different businesses could have similar mission statements
Define SMART objectives.
- Specific
- Measurable
- Achievable
- Realistic and relevant
- Time-limited
Analyse one benefit to a business of having SMART objectives.
- provides a clear direction to work towards
- measurable objectives allow a business to track progress and performance
- achievable and realistic objectives set attainable targets, which can boost employee motivation
- deadlines creates a sense of urgency and ensures that projects and initiatives are completed in a timely manner
Explain one reason why the objective of a private-sector business might be different to that of a public-sector business.
A private-sector business focuses on maximising profits for its owners or shareholders, while a public-sector business prioritises public welfare and providing essential services. This difference leads to different objectives, with private businesses aiming for efficiency and profit, and public businesses emphasising accessibility and sustainability.
Explain two reasons why the objectives of a business might have to change over time.
Due to external environment
- During recession, the objective may change from sales growth to survival.
- Market conditions like shift in demand for a product or competition.
- Depends on the number of years the business has been operating (survival to growth and profit)
- Technological development
Explain one way in which ethics can influence business activities.
- using Fairtrade suppliers
- not taking bribes
- limiting the advertising of toys to adults (so that kids don't pester their parents)
- paying fair wages
Analyse through 2 examples how a company's marketing strategy depends on the company's objectives.
- if the objective is to expand export sales by 10%, products must be designed and promoted in ways that appeal to customers in other countries with different cultural values.
- A tech company with the goal of reaching younger consumers might design a marketing strategy that includes targeted social media campaigns, influencer partnerships, and engaging content on popular platforms.
Analyse how the objective of increasing shareholder value might conflict with CSR.
The objective of increasing shareholder value focuses on maximising profits and delivering high returns to shareholders (through strategies like cost-cutting) However, these profit-driven goals can sometimes conflict with CSR objectives which prioritise ethical practices, sustainability, and social well-beg.
- reducing employee pay
- spending less on health and safety
- reducing environmental standards and not properly disposing of waste.
Analyse the 'triple bottom line' concept when applied to social enterprises.
Economic: make a profit for re-investment rather than shareholder profit. Financial needs to support social and environmental objectives.
Social: ensures that business decisions support social goals by focusing on providing benefit to society by improving community welfare, addressing inequality, or providing essential services.
Environmental: social enterprises ensure that their operations minimise environmental harm and contribute positively to sustainability
Explain the reasons why the owners/directors of a small private limited company would set a profit-satisficing objective.
- aiming to achieve enough profit to keep the owner satisfied.
- because they wish to live comfortably but do not want to work longer hours to earn more profit. (work-life balance)
- might not want to take major risks by focusing on aggressive growth and instead prefer a steady and sustainable growth.
- due to access to limited resources, they might choose satisfactory financial returns over profit maximisation.
- Once this is achieved, will opt for other aims like more leisure time.
Explain 3 business objectives a manufacturing business could establish.
- Achieve higher standards of product quality to meet customer expectations
- Improve the efficiency of the production process to reduce costs and increase output
- Increase the company’s market share by reaching new customers or entering new markets
Identify 4 reasons why short-term profit maximisation might not be an appropriate objective for a medical drug research business.
- The focus on immediate profits can reduce investment in long-term research and innovation.
- Short-term profit maximisation may lead to ethical compromises, affecting patient safety and drug quality.
- Prioritizing profits over patient care can lead to public backlash and loss of market trust.
- Cutting costs to boost short-term profits could result in lower drug efficacy.
Explain one example of a SMART objective that could be set for your school.
Increase Student Participation in Extracurricular Activities:
- Specific: Increase the number of students participating in extracurricular activities
- Measurable: Achieve a 15% increase in student participation rates
- Achievable: Implement new clubs and activities based on student interests
- Realistic and relevant: Set up activities that are easy to access for students
- Time-bound: Achieve this increase by the end of the academic year.
(OR)
Improve Academic Performance in Subject X:
Explain 4 possible benefits to a clothes retailer of strictly observing an ethical code when choosing its suppliers.
- enhancing brand reputation: positive brand image strengthens consumer trust and hence, increases sales
- reduced risk of legal issues: retailers minimise the risk of being involved in labor violations, environmental harm, or other legal issues which can cause damage to the reputation.
- attracts well-qualified employees
- more likely to be awarded govt contracts
Analyse 4 reasons why some businesses might decide not to act ethically in a competitive market.
- ethical practices can be expensive
- desire for short-term profit maximisation
- pressure from shareholders or investors to maximise returns
- if competitors in the market are engaging in unethical practices and gaining a market advantage, other businesses might feel pressured to follow the same
- might prioritise meeting market demands that may not align with ethical practices