BUSINESS AND

MANAGEMENT
MODULE 1


BUSINESS
ORGANIZATIONS &
ENVIRONMENT

ORGANIZATIONAL
OBJECTIVES
If you dont know where
you are going, youll end
up someplace else.

Yogi Berra, former MLB player
Introduction
The annual report for Cadbury Schweppes for 1998
stated that there were 8,374 employees. As they arrive
to work each day, the employees know their jobs and
how to do it. This is because each of the employee has a
clearly defined job description which has been carefully
written to ensure that the job is done in an appropriate
manner.

This situation has not been achieved by accident; on the
contrary, careful attention has been given to the needs of
the business in order for it to operate successfully. Each
department will have certain requirements to fulfill which
will have been generated from the company objectives
which clearly state what the business is hoping to
achieve both in the short and long term.

If Cadburys did not have any objectives, there would be
nothing for the company to work towards. The objectives
determine the role of the employees within the business.


Context
On occasions when the business is faced with a
difficult decision, reference to its objectives will
help in the decision making process.
Objectives provide a sense of direction for the
business and its employees; the objectives can
be assessed by reference to targets which in
turn can be measured.
The Nature of Objectives
Objectives are the goals of the business. They
represent the outcomes or targets that the
business wants to gain in order to achieve its
aims.
The objectives of a business are derived from its
aims.
Well defined objectives are important.
They will help the business to be clear about
what it wants to achieve.
The performance of a business could be
assessed by how effectively it achieves its
objectives.


Characteristics of SMART
Business Objectives
Specific
stating exactly what it is trying to achieve.
Measurable
able to be measured to decide if they have been
achieved.
Agreed
have the approval and understanding of everyone
involved.
Realistic
able to be achieved by the business taking into account
its resources, competition, market, etc.
Time Specific
state a time by which they should be achieved.
Formative Case Study - Lenovo
This Chinese multinational technology firm, bought out the personal
computers division of IBM in 2005.
The aim was to establish itself outside of the Asian market by owning
IBMs globally recognized brands such as ThinkPad laptops.
The company is committed to four key values:
customer service
innovative and entrepreneurial spirit
accuracy and truth-seeking
trustworthiness and integrity
Recently, Lenovo has also tried to increase its market dominance by
sponsoring key sporting events.
Examples include its sponsorship deals with Williams Formula One (Grand
Prix) racing team and the National basketball Association signed in 2007,
and being a key corporate sponsorship of the Beijing Olympic games.

Explain why it is important for Lenovo to specify its organizational
objectives.
Examine the reasons why Lenovo might not be able to meet its
objectives.

Factors Which Determine the
Corporate Objectives of a Business

The size and status of the business.
The power of stakeholders.
Ownership.
Long and short-term objectives.
External and internal pressures.
Risks
Corporate and business culture.
Number of years the business has been
operating.


AIMS
MISSION
CORPORATE OBJECTIVES
DIVISIONAL OBJECTIVES
DEPARTMENTAL OBJECTIVES
The business over all purpose. The long-term
goals which a business hopes to achieve. No
two companies will have the same corporate
aims.
A statement of the businesss core aims, phrased in a
way to motivate employees and to stimulate interest
by outside groups. Its an attempt to condense the
purpose of the businesss existence into one
statement.
INDIVIDUAL TARGETS
These are the goals of the business. They
are the outcomes or targets the business
want to gain in order to achieve its aims. The
objective of a business can be derived from
its aims
Specific targets for separate
divisions.
Targets for each
department
Individual
goals/targets
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THE HIERARCHY OF OBJECTIVES
INDIVIDUAL TARGETS
TO MAXIMISE SHAREHOLDERS VALUE
TO INCREASE PROFITS OFF ALL DIVISIONS BY
10% PER YEAR
WITHIN ONE REGION, TO INCREASE
MARKET SHARE BY 10% AND CUT
OVERHEADS BY 5%
MARKETING: Increase Profits by
10%; FINANCE : Reduce Long-
term borrowing by 5%; R&D:
Develop one innovative product
each year.
E.G IN THE MARKETING
DEPARTMENT
Increase Sales by an average of
5% per client.
Introduce five more clients to
the business each year.
AIMS
CORPORATE OBJECTIVES
DIVISIONAL OBJECTIVES
DEPARTMENTAL OBJECTIVES
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THE HIERARCHY OF OBJECTIVES
Other Types of Objectives
Short term vs Long term
Tactical (Operational)
Strategic
Ethical
CSR
Tactical (Operational)
Short term objectives that are
mainly departmentalized
More sales; lower costs etc
Survival especially in tough
economic times
For example, a company may have a
corporate objective of becoming a global
operator in ten years, getting
established in Europe within one year
may be a tactical objective

Strategic Objectives
Long term plans that usually affect
the entire business
Growth
Image and reputation
Market share
In reality, businesses may have
several strategic objectives taking
place during the same time
Examples: Strategic Objectives

A bigger market share.
Quicker design-to-market times than
rivals.
Higher product quality than rivals.
Better customer service than rivals
Recognition as a leader in
technology

Ethical Objectives
Ethics are the moral principles that
guide decision-making and strategy
An ethical business is likely to treat
its workers, customers, shareholders
and the environment in a responsible
manner

Exercise - Walmart
Exercise Peter Drucker
Complete the Peter Drucker
assignment found on the S drive
Strategic Questions Involving Ethical
Objectives
Is it ethical to reduce costs by exploiting cheaper
labour in less economically developed
countries?
Is it ethical to sell products that are legal, but
known to harm those who use them?
Is it ethical to target children in advertising?
Is it ethical to manufacture products that are
used to kill?

These are big questions that elicit strong views
Class Discussion
You are the CEO of a company which
produces a special line of mens clothing
and you are seeking a bigger market
share for your products.
Using the SMART acronym, establish your
Corporate, Strategic, Ethical and
Operational objectives.
What possible corporate objective your
business can have with regard to the
following groups of stakeholders?
Customers; Suppliers; Employees

Formative Case Study
Case: McDonalds vs Burger King
Source: Business & Management, Paul
Houng, Unit 1.3, Pg 51


DECA Connection
You are to assume the role of a plant employee, whos
company is experiencing a serious problem with
productivity.
Much of the problem can be traced to employees with
young children.
When their care-giver arrangements dont work out