Topic 1 Business Organization and Environment

1.3 Organizational objectives

Vision and mission statements:

Vision statements are more forward looking and speak to the long-term aims and
highest aspiration of a business.

Mission statement is more grounded in the aim of accomplishing objectives to

achieve the mission, an intermediate step on the way to the vision.

- The two statements two statements should complement each other, with the
vision statement being produced first.
- Less specific than a mission statement, the vision statement serves as a
guiding principle.

Vision
Concept What do we want?
Purpose Points to the future
Audiences Internal stakeholders: inspires
and motivates employees
External stakeholder: binds
them to the business by giving
a sense of shared beliefs
Change Vision should never change
Mission
Why are we doing what we are doing?
Based on where the business is now,
communicates what has to be done in
order to achieve the vision
Internal stakeholders: provides a
means for accountability by defining
key performance indicators
External stakeholders: measures how
successful the business is at achieving
its vision
May change = form changing external
environments mission statement
may need to be modified to meet ne
circumstances

Aims: long-term goals

Vision statement: summary of these aims

Objectives: medium- to short-term goals that clarify how the business will achieve
its aims and reach its visions.

Mission statement: summarizes these objectives

Strategic objectives: (set by senior Tactical objectives: (middle Operational objectives:

managers) managers) (floor managers)

Medium-to long-term objectives to Medium- to short-term to Day-to-day to reach its

guide the company to achieve aims achieve strategic objectives tactical objectives
Topic 1 Business Organization and Environment

Hierarchy of objectives: EG

Aim: Strategic Tactical objectives: Operational

objectives: objectives:
To be the most To have the To hire and retain Have the average
successful car highest market enough salespeople amount of time that
leadership in the share of car so that the a customer waits to
city leaderships in the dealership has be greeted by a
city sufficient to serve salesperson to be
customers at all less than two
times minutes

Best business objectives are SMART:

Specific

Measurable

Achievable

Relevant

Time-specific

The need for organizations to change objectives:

Objectives change because of changes in either of these environments:

Internal environment:
- Leadership
- HR
- Organisation
- Product
- Finance
- Operations
- Social
- Technological
- Economic
- Ethical
- Polotial
- Legal
- Ecological
External environment:

Why organisations set ethical objectives:

Topic 1 Business Organization and Environment

Objectives such as these are goals based on established codes of behaviour that,
when met, allow the business to provide some social or environmental benefit or not
hurt society or the environment in the process of making profit.

Reasons:

Building up customer loyalty

Creating positive image
Developing positive work environment
Reducing the risk of legal redress
Satisfying customers ever-higher expectations for ethical behaviour
Increasing profit

Impact of implementing ethical objectives:

When business set ethical objectives many areas will be affected:

Business itself long run may be beneficial. Short run ay face costs.
Employees accustomed to certain norms may resist.
Competitors may have to respond to maintain their market position
Suppliers may have to respond in order to protect their orders
Customers - likely to trust the business and develop strong brand loyalty
Local community- strengthens relationship of business with local community
Governments- businesses with ethical objectives are more recognized

Difference between ethical objectives and corporate social responsibility (CSR):

Ethical objectives are specific goals that the business may set for itself based on
established codes of behaviours

CSR is the concept that the business has an obligation to operate in a way that will
have a positive impact on society

Importance of corporate social responsibility:

Business committed to CSR obeys laws but also interacts responsibly and honestly
with customers and reduces its impact on the environment. = sustainable business
model

Businesses want to position themselves as role models difficult on a global scale

but possible for multinational companies

SWOT analysis

Helps managers brainstorm the perceived strengths, weaknesses, opportunities and

threats facing the business. Analysis based on perceptions.

Positive factors Negative factors

Topic 1 Business Organization and Environment

Internal to the business Strengths Weaknesses

External to the business Opportunities Threats

Strengths Weaknesses
Opportunities SO WO
Growth strategies Re-orientation strategies
Threats ST WT
Defusing strategies Defensive strategies

Growth strategies: produces positive short-term strategies

Defensive strategies: negative short-term strategies

Re-orientation strategies: focuses on addressing its weaknesses to use them for

opportunities. Positive long-term

Defusing strategies: eliminate threats in the market by focusing on strengths of

business. Medium-to short-term strategies

The ansoff matrix

Business tool helps businesses to plan and set objectives.

Existing product New product

Existing Market penetration: Product development:
market Occurs when business grows by Development of new products for
Topic 1 Business Organization and Environment

increasing its market share, selling existing market upgrades of

more of its existing products in the existing products
same market. Effective market research
Relies heavily on promoting brand Strong research and
loyalty to encourage repeat development system
customers and to lure customers First mover advantage
away from competitors.
Growth potential of the
market
Strength of customer loyalty
Power and ability of
competitors
New Market development: Diversification:
market Expands market by looking for new Introducing a new product into a
market segments in the existing new market a business combines
market. 2 risks:
Effective market research Lack of familiarity and
Having local knowledge on experience in the new
the ground market
Effective distribution channel Havent tested of any new
product
To reduce risk:
Effective market research
Due diligence testing to
determine:
1. Attractiveness of the
market
2. Cost of entering the
market
Recognition of the existing
business
Possible tie-ups with other
businesses with the
necessary experience
Topic 1 Business Organization and Environment

Vision statement should summarise what the business hopes to be in the

future. Should remain constant.
Mission statement describes what the business is doing now. Might need to
be modified.
Aims are long term-goals.
Objectives are short to medium term goals which allow business to meet its
aims. Should be SMART (specific, measurable, achievable, relevant, time-
specific)
Business strategy is an over arching plan of objectives which will enable aims
to be met
Business tactics are the actions and objectives which allow a business to
implement strategy
Ethical objectives are goals that a business sets for itself based on
established codes of behaviour
Corporate social responsibility (CSR) is the concept that all businesses have
an obligation to operate in a way that will have a positive impact on society
A SWOT analysis is a tool used in business planning. It involves analyzing
strengths, weaknesses, opportunities and threats. Both inside a business and
externally.
Ansoff matrix used to plan business growth. Considers new and existing
products and markets to identify opportunities. Allows business to identify
market penetration, market development, product development,
diversification