Organizational Objectives
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The document discusses organizational objectives and how they function to control, motivate, and direct a business. It explains that objectives can be set at different levels and should meet the SMART criteria. The relationship between aims, objectives, strategies, and tactics is explored. Common strategic objectives like profit maximization and growth are outlined. The importance of ethics, corporate social responsibility, and social/environmental auditing are also summarized.
Organizational Objectives
- 2. Four key questions Where are we now? Where do we want to be? How do we get there? How do we know we are there?
- 3. Organizational Objectives Have three key functions: ◦ To control ◦ To motivate ◦ To direct
- 5. Organizational Objectives Businesses set objectives for several reasons: ◦ Give a sense of direction, purpose and unity ◦ Are foundation to decision-making ◦ Can help to encourage strategic thinking ◦ Provide a measurement and controlling the performance
- 6. Business objectives Can be set at different levels: ◦ Corporate objectives ◦ Departmental objectives ◦ Individual objectives
- 8. Mission Statements “Why we exist” "Who we are and what we do" Nestlé is the world's leading nutrition, health and wellness company. Our mission of "Good Food, Good Life" is to provide consumers with the best tasting, most nutritious choices in a wide range of food and beverage categories and eating occasions, from morning to night
- 9. Nike’s mission statement
- 10. Managers need to ensure that decisions are consistent with the organization’s mission statement
- 11. Vision Statements 'An Image of the future we seek to create' They contain details of the company's future - its vision (the future plans with aims and objectives). These types of statements focus on tomorrow Focused on the long term
- 12. COCA COLA To achieve sustainable growth, we have established a vision with clear goals. Profit: Maximizing return to shareowners while being mindful of our overall responsibilities. People: Being a great place to work where people are inspired to be the best they can be. Portfolio: Bringing to the world a portfolio of beverage brands that anticipate and satisfy peoples; desires and needs. Partners: Nurturing a winning network of partners and building mutual loyalty. Planet: Being a responsible global citizen that makes a difference.
- 13. Avon Products Vision Statement "To be the company that best understands and satisfies the product, service and self-fulfillment needs of women - globally."
- 15. Mission and Vision Statements Critics argue that mission statements are no more than PR stunts. After all, the ultimate purpose of most businesses is to maximize profits.
- 16. Effective business objectives Usuallymeet the SMART criteria What’s SMART? SPECIFIC MEASURABLE ACHIEVABLE REALISTIC AND RELEVANT TIME-SPECIFIC
- 17. SMART criteria - Specific
- 18. SMART criteria - Measurable
- 19. SMART criteria - Achievable
- 20. SMART criteria – Realistic and relevant
- 21. SMART criteria – Time-specific
- 22. Here’s a list of business objectives A supermarket chain has set itself the objective of increasing the market share from 20% to 80% in three years. An international school sets itself the Which of these objective of becoming the best in the objectives do you think world are the most A taxi company has the objective of useful, and which aren’t very helpful? increasing gross profit by 3% this year Explain you A football club has set the objective of reasoning. improving its future performance
- 23. Here’s a list of business objectives An electricity company has set itself the target of reducing consumer complaints from 8% to 6% within the next 12 months
- 24. Aims The general long-term goals of an organization. Vague, unquantifiable statements such as: “to provide high quality education to the local community” or “to promote social and environmental integrity”.
- 25. Objectives Short term and more specific goals of and organization, based on its aims. More likely to be quantifiable and measurable. For example, a school may set the objective “to achieve a 95% pass rate at IB examination level”.
- 26. Exam tip! What’s the difference between ‘aims’ and ‘objectives’?
- 27. Short term vs. Long term objectives Strategy term used to refer to any plan or scheme to achieve the long-term aims of a business. HOW DO WE GET THERE? Tactics Short-term ways that firms can use to achieve their aims and objectives.
- 28. Tactics Activities a business will employ to implement its strategy on a day-to-day basis and are put into action at the individual department or employee level. They should contribute positively to the overall strategy of the business.
- 29. Tactics Departments will tend to set their own short-term departmental objectives: ◦ Sales department planning to raise sales by $20,000 within the next year ◦ Personnel department planning to keep staff turnover below 10% Short-term objectives tend to refer to targets set for the next 6-12 months
- 30. Strategies Long-term plan illustrating how the business will achieve its objectives. Strategic objectives, therefore, represent significant long-term goals. Long-term objectives function as starting points, to make it easier to prioritize and allocate resources and to coordinate short-term, tactical objectives
- 31. Strategic Objectives – common objectives Profit maximization Profits are essential for rewarding investors in a business and for financing further growth, and are necessary to persuade business owners and entrepreneurs to take risks. Profit maximization means producing at the level of output where the greatest positive difference between total revenue and total costs is achieved
- 32. Profit maximization Peak/quiet periods Dividends
- 33. Growth The growth of a business – in terms of sales or value of output – has many potential benefits for the managers and owners. Larger firms will be less likely to be taken over and should be able to benefit from economies of scale. Managers may gain higher salaries and fringe benefits. Businesses that do not attempt to grow may cease to be competitive and, eventually, will lose their appeal to new investors.
- 34. Growth Its benefits could include: ◦ Economies of scale ◦ Market power ◦ Reduced risks
- 35. Image and reputation A bad image, perhaps portrayed by the media, can turn customers against a firm’s products and services. Increasingly, businesses are delivering better levels of customer service, such as better on- site facilities, after-sales care and trained customer relations staff. Suppliers prefer to do business with firms that are reputable and reliable. Employees are likely to be motivated of their business if it has a positive corporate image
- 36. Market standing Itrefers to the extent to which a firm has presence in the marketplace. People need to feel the business offers something extra special. Microsoft Walmart Toyota
- 37. Exam tip What’s the link between aims, objectives and strategies? Become the # 1 supplier of a product Increase market share Expanding into overseas markets
- 38. Ethical objectives What are ethics? What are morals? An ethical business is likely to be responsible for its treatment towards its customers, workers, shareholders and the natural environment. http://www.youtube.com/watch?v=Dij_AjxoGyU http://www.youtube.com/watch? v=mQj2u4ap5bo&feature=related
- 39. UNEthical behavior Financial dishonesty
- 40. Environmental neglect
- 41. Exploitation of suppliers
- 42. Workforce exploitation
- 44. Advantages of being ethical Improved corporate image Increased customer loyalty Cost cutting Improved staff motivation Improved staff morale
- 45. Limitations of being ethical Compliance costs Lower profits Stakeholder conflict
- 46. CSR To whom is a business answerable? Should business activity be solely concerned with making profi ts to meet the objectives of shareholders and investors or should business decisions also be infl uenced by the needs of other stakeholders?
- 47. CSR – Corporate Social Responsibility When a firm fully accepts its legal and moral obligations to stakeholders other than investors, it is said to be accepting corporate social responsibility (CSR). McDonald’s litter patrol Coca Cola house building
- 48. CSR – Corporate Social Responsibility Examples of recent CSR developments include: ● the growth in the number of firms that promote organic and vegetarian foods ● increasing numbers of retailers emphasizing the proportion of their products made from recycled ● businesses that refuse to stock goods that have been tested on animals or foods based on genetically modified ingredients.
- 49. Social/Environmental Auditing Environmental: Environmental assesses the impact of a business’s impact on the environment An environmentalau dit would check the pollution levels, wastage levels, energy use, transport use and recycling rates of the business and compare them with previous years, pre-set targets and possibly other similar businesses.
- 50. Social/Environmental Auditing Social: Social an independent report on the impact a business has on society. This can cover pollution levels, health and safety record, sources of supplies, customer satisfaction and contribution to the community
- 51. Social audits can include an environmental audit, but they give details of other impacts on society too. These include: ● health and safety record, e.g. number of accidents and fatalities ● contributions to local community events and charities ● proportion of supplies that come from ethical sources, e.g. Fairtrade Foundation suppliers ● employee benefi t schemes ● feedback from customers and suppliers on how they perceive the ethical nature of the business’s activities.