BUSS3 Chapter 1 functional objectives

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Teacher presentation AQA Unit 3

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Unit 3:

Unit 3 A2 Business

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The difference between AS and A2 We move from small to large national and international businesses Analysis and Evaluation Skills are even more important This time they need to be backed up with actual evidence You need to know about real life businesses Log on to http://www.tutor2u.net/blog/index.php/business-studies/ Register and get emails each day so that you know what is happening in the world of business and can use examples as evidence

Functional Objectives and Strategies:

Functional Objectives and Strategies We know why targets are so important to a business Employees know what they need to do They have the basis for decision making As a business gets bigger Life becomes more complicated Survival may no longer be the main objective Objectives become even more important Need long term aims and Short term objectives The question of whether to locate in a low cost country or launch a new product will depend on the long term aim As a business grows it may organise itself into functions –these functions will need their own objectives (their own goals that help the business achieve the corporate objective)

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Setting the scene Have a look at the M&S Case Study Now make some very quick notes on the questions

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Corporate Objectives As a business grows the founder(s) will become less involved in the day to day decision making They will set the mission and then the corporate objectives A mission statement is a clear and succinct representation of the enterprise's purpose for existence At Sainsbury's we will deliver an ever-improving quality shopping experience for our customers with great products at fair prices. We aim to exceed customer expectations for healthy, safe, fresh and tasty food, making their lives easier everyday.

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Corporate Objectives Once the mission has been set the corporate objectives can be established Great food at fair prices Accelerating the growth of complementary non-food ranges and services Reaching more customers through additional channels Growing supermarket space Active property management

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Corporate Objectives The corporate objectives have to be measurable so that senior management can measure progress They have to be clear so that all employees understand what the company is trying to achieve This means that anyone needing to make a decision can do so based on the objectives The rationale is that if everyone works together there is more chance of actually achieving the objectives

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Corporate Objectives activity Look back at M&S’s key objectives in the case study In pairs write down some ideas on the following What measures could they introduce to track their progress with these objectives? What do you think their functional objectives would be? Think about what each of these functions/departments would need to do to achieve the overall objectives Operations Marketing HR Finance

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Functional Objectives Every functional area/department will use the corporate objectives to set their own targets They also have to make sure that their targets do not conflict with other functional targets As businesses grow this becomes very complicated and extremely time consuming Not only setting the targets but having a coordinated approach to tracking/measuring progress is very difficult. Marks & Spencer has an executive team of 27 people that work on these types of things – that shows you how important it is to get right In reality every business will have its own structure and name its functions differently. In this course we use the generic functions of HR, Finance, Operations and Marketing. Whatever the functions are called the same issue of coordination of functions exists Evaluation point – a target for a particular function will help the business to be a success but only if it is not conflicting with other departments – this is why it is so important that all functional objectives are in line with the corporate objectives.

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Functional Strategies Once the functional objectives have been set the department will need to put a plan together so that it is able to achieve the objective This plan is called a functional strategy Targets then have to be set for individuals so that they follow the functional strategy and help achieve the function’s objectives All objectives and strategies need to be SMART S pecific – there is no confusion about what is required M easurable – a quantifiable goal is clear A greed - consult and agreement with the function/individual R ealistic – it can be achieved but is stretching T ime based – time targets are given to see progress Examiners Tip In an exam don’t explain what SMART targets are (assume that the examiner already knows). Use the principle to analyse – what objectives have been set how performance is being measured and whether the strategies are feasible

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Insert fig 1.4 P5

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Functional Objectives Marks & Spencer had the following functional strategies Acquire Per Una (previously licensed) Sell Marks & Spencer money to HSBC but retain 50% profits Heavy TV, newspaper and billboard advertising Increase customer assistants and time spent with customers Improve rewards packages, training and career paths Launch new website Store modernisation Streamline product ranges – reduce costs and problems with high stock levels Introduce new products and services e.g. home

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Case Study P6 Greater output frames company strategy Answer all questions including Research Task Research tasks are now very important as it is vital that you have real life examples to give in exams Complete Summary Questions P7 To be completed for homework by …………..

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