1.

3: Organizational objectives
Definitions

1. Aims are the long-term goals of a business, often expressed as the firm’s mission
statement. They are a general statement of a firm’s purpose or intentions and tend to be
qualitative in nature.
2. Ansoff Matrix is an analytical tool to devise various product and market growth
strategies, depending on whether businesses want to market new or existing products in
either new or existing markets.
3. Corporate social responsibility (CSR) is the conscientious consideration of ethical and
environmental practices related to business activity. A business that adopts CSR acts
morally towards its various stakeholder groups and the wellbeing of society as a whole.
4. Ethical code of practice is the documented beliefs and philosophies of an organization.
5. Ethics are the moral principles that guide decision-making and strategy. Morals are
concerned with what is considered to be right or wrong, from society’s point of view.
6. Mission statement refers to the declaration of the organization’s overall purpose. It forms
the foundation for setting the objectives of a business.
7. Objectives are the relatively short term targets of the organization. They are often
expressed as SMART objectives.
8. SMART objectives are targets that are specific, measurable, achievable, realistic and time
oriented.
9. Strategies are plans of action that businesses use to achieve their targets, i.e. the long-
term plans of the whole organization.
10. SWOT analysis is an analytical tool used to assess the internal strengths and weaknesses
and the external opportunities and threats of a business decision, issue or problem.
11. Tactics are the short-term plans of action that firms use to achieve their organizations.
12. Vision statement is an organization’s long-term aspirations, i.e. where it ultimately wants
to be.
 Vision statements vs. Mission statements
Vision statements Mission statements

1. Where the firm wants to be in the future. 1. The purpose of the firm.

2. Focused on long term effects. 2. Focused on medium to long term effects, so

more updated than vision statements.

3. Allow people what the business could 3. Allow people to see what the business likes
be. to achieve in the future.

4. Outlines their target for the firm in the 4. Outlines the values the firm believes in.
future.

Examples

PepsiCO’s vision is to deliver top-tier PepsiCo’s mission is to provide consumers

financial performance over the long term around the world with delicious, affordable,
by integrating sustainability into our convenient and complementary foods and
business strategy, leaving a positive imprint beverages from wholesome breakfasts to
on society and the environment. healthy and fun daytime snacks and beverages
to evening treats.

Aims vs. Objectives

Aims Objectives

1. Long term goals of an organization, i.e. 1. Short-to-medium term goals and specific
what the business wants to happen. targets an organization in order to achieve
their aims.

2. Vague and unquantifiable. 2. Specific and quantifiable.

3. Not-necessarily time bound. 3. Time-bound.

4. Set by senior directions of an firm. 4. Set by managers or subordinates of a firm.

Importance of aims and objectives

1. Help measure and control the firm’s performance.

2. Help inspire managers and employees to reach a common goal, thus unifying and
motivating the workforce.

3. Provide clear focus for all individuals and departments of an organization.

 Tactical Objectives vs. Strategic Objectives
Strategic Objectives Tactical Objectives

1. Long term goals of an organization 1. Short-to-medium term goals that affect a

section of the organization.

Examples of objectives

1. Profit maximization 1. Newly established business focus on the

firm being able to survive in the industry.
2. Growth and evolution of a business.

3. A firm’s position in the market. 2. Sales revenue maximization by establishing

themselves in their market.
4. Brand image and reputation

Levels of strategies

1. Operational strategies that focus on day-to-day methods used to improve the efficiency of
an organization

2. Generic strategies that affect the business as a whole.

3. Corporate strategies that are targeted at long term goals of a business.

Internal factors for changing objectives

1. Corporate culture
● Firms with flexible and adaptive corporate culture tends to be have innovative objectives.

2. Type and size of the organization

● Change in legal status of a business → Change in organizational
objectives.

3. Private vs. public sector organizations

● Public sector firms strive to provide a service to general public, unlike most private
sectors who strive for profit maximization.

4. Age of the business

● Newly established firms tend to have break-even and survival as their key objectives.
● Established firms tend to strive for growth and higher market share.
5. Finance
● Availability of finance → Scale of a firm’s objectives.

6. Risk profile
● Managers with high willingness and ability to take risks → Interesting
objectives to be set → New innovations.

7. Crisis management
● Firms may face internal crises, such as high staff turnover rate, failing productivity and
motivation problems, liquidity problems, issues about quality standards.

External factors of changing objectives

1. State of the economy

● Economic booms can provide opportunities for business.
● Economic recessions can be a threat to businesses.

2. Government constraints
● Government rules and regulations limits the extent to which a firm strives to achieve.

3. Presence and power of pressure groups

● Pressure groups can force businesses to look at ethics when making decisions.
● They might harm the firm’s image if they act unethically.

4. New technologies
● New technologies and innovations can create many opportunities for firms.

Corporate social responsibility

● Obligations for firms that act morally towards stakeholders.
● In order to achieve their ethical objectives, firms set up a code of practice and publish it
in their annual reports to show their beliefs and philosophies.
● The perceptions of what is wrong and right changes over time, so it is important for firms
to review their objectives to meet the current situation of the external environment.
● Different countries have different view on CSR, which makes it complicated for MNCs
to act in order to satisfy all the countries they operate in.
● Three attitudes towards the role of firms in delivering CSR:
❖ Self-interest
➢ Firms don’t really care if they act socially responsible as long as they are making
profits for themselves.
 ❖ Altruistic
➢ NGOs and NPOs act socially responsible to help the general public, and they
don’t care about profit maximization.
❖ Strategic
➢ Firms only act in a socially responsible if it benefits them to be more profitable.
● Advantages:
○ Acting socially responsible improves brand image and reputation.
○ Increases customer loyalty since firms act morally to them.
○ Cut certain costs such as litigation costs.
○ Improves staff morale and motivation as they would be proud of
working for a firm that act ethically → Increase in productivity
and employee loyalty.
● Disadvantages:
○ Being socially responsible means the costs are gonna be very high.
○ If compliance costs aren’t passed onto customers, lower profits will be made.
○ It can result in stakeholder conflict if each stakeholder has different views.
○ Ethics and CSR are subjective.

SWOT Analysis
● Business tool used to assess the current and future situation of a firm by analyzing its
internal factors (strengths,weaknesses) and external factors (opportunities, threats).
● Advantages:
○ Completing a SWOT analysis can be quick and simple
○ Has a wide range of applications
○ Helps determine the firm’s position in the market.
○ Encourages foresight and proactive thinking in decision-making process.
○ Reduces risks of decision-making by demanding objective thought processes.
● Disadvantages:
○ Simplistic and doesn’t demand detailed analysis.
○ Model is static while the business environment is changing.
○ Only useful if decision-makers are open to admit their weaknesses and act upon
them in the future.
○ Not typically used in isolation.
Ansoff Matrix
● Business tool that helps managers choose various product and market growth strategies.
● Four growth strategies are:
❖ Market penetration
➢ Low risk strategy.
➢ Existing products in existing markets.
➢ Can be achieved by offering more competitive prices or by improved advertising
to persuade people to buy their product.
❖ Product development
➢ Medium-risk strategy.
➢ New products in existing markets.
➢ Can be achieved by product extension strategies or brand development.
❖ Market development
➢ Medium risk strategy.
➢ Existing product in a new market.
➢ Can be achieved by establishing new distribution channels, tweaking promotional
strategies to suit the new market, changing prices.
❖ Diversification
➢ High risk strategy.
➢ New product in new market.
➢ Can be achieved by use of subsidiaries and strategic business units.