8/4/2019 Business Objectives and Strategy-Revision
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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. highgearing),
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.
