1.3 organizational objectives notes

8/11/2019 1.3 Organizational Objectives Notes

1/6

1.3 Organizational Objectives

Mission & Vision Statements

Mission Statement: a businesss core aims, phrased in a way, which motivatesemployees and stimulates interests by outside groups.

Vision Statement: a statement, which states what, the organization aims to achieve or

accomplish in the long run.

Vision Mission

Concept What do we want? Why are we doing, what were doing?

Purpose A vision is a future forecast, its

what the business will work

towards in achieving

A mission focuses on the present and

how it needs to be communicated in

order to fulfill the vision.

Audience Inspires and motivates employees

External stakeholders relate with

the business due to shared beliefs

Means for accountability by defining key

performance indicators

Measures how successful the business is

for external stakeholders

Change The core values that express the

vision should never change

The mission can change and become

modified as circumstances(time)

changes

Advantages and Disadvantages

+ Informs what the central aims are

+ Helps to motivate employees

+ Can help to guide individual employee behavior (acting ethically) + Helps to establish what the business is about


2/6

- Too vague and general

- A PR exercise to make stakeholders feel good about the organization

- Impossible to analyze or disagree with

- Lack specific detail

ObjectivesThese are shorter, more specific goals based on the aims of the organization. They state

what an organization needs to do in order to achieve their aims.

There are two main ways of fulfilling aims; strategies and tactics

Strategic and Tactical Objectives

Strategic Objectives: long-term objectives set by the directors to guide the company in

the right direction in order to fulfill its aims.

o Set by board of directors or senior manages

o Difficult to reverse or change once established

o Long-term goals for the organization

o Often high-risk involving resources

Tactical Objectives: short-term objectives set by

managers to achieve the strategic objectives

o Set by managers

o Easy to change/modify

o Short-term goals

o Less risky involving few resources

Operational Objectives: the day-to-day objectives

set by floor managers (and sometimes workers

themselves) so that the company can reach its

tactical objectives

Set by managers to ensure:

o Coordination between all divisions (

o Consistency with strategic corporate

objectives

o Adequate resources are provided to allow

for the successful achievement of the objectivesOnce divisional objectives have been established,

these can be further divided into departmental

objectives and finally budgets and targets for

individual workers. This is known as MBO

management by objectives)

Importance of Objectives

Gives a sense of direction

Purpose and unity within the organization

Encourages strategic thinking

Foundation of decision making Basis for controlling and measuring performance


3/6

SMART Criteria

What ideally business aims should fulfill:

S Specific

MMeasurable

AAchievableRRealistic

TTime specific

Corporate Objectives

Important, broadly defined aims that a business aims to achieve

o Profit maximization

o Profit satisficing

o Growth

o Increased market share

o Survival

o Corporate social responsibility

Factors determining corporate objectives

o Corporate culture

o Size and legal form of business

o Public or Private sector

o Well established-businesses

Changing business objectives

These can change over time in response to changes internally (resources) or externally

(economic environment). Reasons for changes include:

A business may have reached its original objective and now needs to set some

new ones

Changes of senior staff may lead to changes in direction

External competitive and economic environment may change (eg. recession)

A short-term objective might be replaced with a long-term objective

Changes in the internalenvironment of a business might include:

Leadership - new leaders coming into the organisation

HR (Human Resources) - industrial action could force change in an organisation

Organisation - mergers or acquisitions can cause many objectives to have to

change

Product - performance in the marketplace may force changes to be made to a

product

Finance - recessions could mean less finance is available to a business

Operations - relocation of a factory of purchase of new technology

Changes in the externalenvironment of a business might include:

Social - changes in society or culture


4/6

Technological - rapidly changing technology

Economic - changes in market conditions or recessions/booms

Ethical - changing values in society (Fair Trade, Organic, sustainability)

Political - changes in government could lead to changes in the business

environment

Legal - regulations, taxes etc can affect the external environment

Ecological - growing awareness of being green can cause a business to make

changes

Ethical Objectives

Ethics: a set of values and beliefs, which influence how individuals, groups and societies

behave.

Pressure for a business to operate ethically can be from internal or external influences.This will affect business decisions. A business can act ethically by:

o Reducing pollution

o Recycling

o Using environmentally free disposal methods

o Treating staff well

o Doing fair trade with less developed countries

Businesses use their ethical practices as a unique selling point. This is a very costly

process, so the business must that they get the return (profits) of implementing these

practices.

Why are ethical objectives important?

Builds customer loyalty

Creates a positive image about the organization

Develops a positive work environment

Reduces the risks of legal address

Satisfying customers even higher expectations for ethical behavior

Increasing profits

Benefits and Limitations of acting ethically

Benefits Limitations

Avoiding bad publicity Lower profitability due to higher

costs

Avoiding legal cases for acting

unethically

Free economy, businesses can do

what they like

More loyal consumers May hinder from main aim; which

is to provide a good or service

More government contracts Can cause conflict between

stakeholders

More well qualified and welltrained staff


5/6

Corporate Social Responsibility (CSR)

CSR is when businesses act morally towards stakeholders, boosting their reputation. This

should only be done in the interest of the business, as it is costly.

The main reasons businesses have changed their approach to CSR are:

Increasing publicity from international pressure groups like Greenpeace

The UN development goals have forced many countries to take environmental

concerns into consideration

Global concern over climate change is forcing companies to consider the

consequences of their actions

Legal changes have forced businesses to refrain from certain practices

Free-Market Attitudethis is the attitude towards CSR that such social issues are theresponsibility of governments, not businesses. They instead make profit, pay tax and

provide employment only.

Altruistic Attitudethis is the attitude that businesses should always seek to give back

to society simply out of humanitarianism and unselfishness.

Strategic Attitudethis is the attitude that businesses should be socially responsible if it

will benefit them and will bring profit and growth.

SWOT Analysis

Positioning is a perceptual location. It's where your product or service fits into the

marketplace. Effective positioning puts you first in line in the minds of potential

customers. SWOT analysis can be combined with positioning to develop one of the

strategies below:

Growth - combine the strengthsof the business with market opportunities

Defensive - this is a good strategy when a business has both threats and

weaknessesand is a survival strategy

Re-orientation - the focus is on addressing the weaknesses in order for a

business to use the opportunitiesavailable

Defusing - designed to eliminate threatsin the market by focusing on the

strengths of the business

Ansoffs Matrix

A useful business tool to help businesses plan and set objectives - particularly growth

strategies.

The matrix looks at the growth potential in terms of the market and product and

considers both existing and new markets and products.


6/6

Market penetration - occurs when a business grows by increasing its market

share, selling more of its existing products in the same market

Market development - expands the market by looking for new markets or for

new market segments in the existing market

Product development - development ofnew products for the existing market

Diversification - a business can

introduce a new product into a new market -

the most risky strategy

1.3 organizational objectives notes

Documents