Business and Management:

1.3 Organizational Objectives

Lesson 1

Pages 41-44

1. Focus Questions1. Focus Questions

1. What are some important organizational objectives?

2. What is a mission statement?

3. What is a vision statement? Do they differ?

…

2. An overview

What is the core role of management? Starts with a D_____? Anyone? Decision-making…right!

There are four (4) key questions that management MUST ask in the decision-making process:

1. Where are we now?

2. Where do we want to be? (we are going to focus on this)

3. How do we get there?

4. How do we know we are better?

5. …

3. Where do we want to be?

This question answers this: The aims and objectives of business organization.

How do organizational objectives guide a business? Gives the business a sense of direction. When you drive a car and get lost, what do you use to find

your way?• A road map.

Organizational objectives have three (3) functions:1. To control a firm’s plan (set up targets within a department.2. To motivate or inspire people to reach a common goal.3. To direct; to provide an agreed and clear focus for

everyone in the organization.4. …

4a. The importance of objectives

Why is target setting vital in all businesses? If you do not do this you will have no clear sense of

direction. No clear purpose.

Aims and objectives are set for many important reasons: Give a business a sense of direction, purpose and unity. Forms the foundation for business decision-making. Encourages strategic thinking (planning for long term). Provides a basis for measuring and controlling the

performance of the workforce, the management, and the entire business.

…

4b. The importance of objectives

What are the many groups affected by the performance and activities of a business?

Stakeholder / shareholder groups• What are they interested in?

• Profit….show me the money Jerry!

Local community• What are they concerned about?

• Social responsibility of a business.• …

5. Business objectives at different levels

Corporate objectives: Deal the with whole organization.

• Goals, profit maximization, growth, over all survival.

Departmental objectives• Very specific objectives; departmental targets

Individual objectives• Targets set for you or by you.• Often used in performance appraisal

• Sales targets; if you are a salesperson.• …

6a. Mission and Vision Statements

A vision statement: Outlines a business’s aspirations (where it wants

to be). They relate to the attainment of success

• “ I have a dream…”• “To be the leading sports brand in the world”

It is an image of an ideal situation in the future. …

6b. Mission and Vision Statements

A mission statement: Explains what the business is trying to achieve. Outlines the organizations values. It is a simple declaration that states the purpose of an

organization’s existence. It will outline how a vision statement will be achieved. These statements do not have a time frame. They should be clearly defined and realistically achievable. It will serve to unify all people and corporate culture in an

attempt to achieve the organization’s vision.• As a manager you will need to ensure that decisions are consistent

with the mission statement.• …

6c. Mission and Vision Statements…still confused???

Vision Statements Focused on long term. Not updated frequently. No actual targets.

(what could be)

Mission Statements Focused on medium to

short term. Are updated frequently. Have actual targets.

(what will be) Highlights the values of

the business. …

Business and Management:

1.3 Organizational Objectives

Lesson 2

Pages 44 - 50

1. Focus Questions1. Focus Questions

1. What are aims and objectives?

2. What is meant by short-term vs long-term objectives?

3. What ethical objectives do companies follow?

…

2. Aims and Objectives

Aims: Are the long term

goals of an organization.

They give a purpose to the direction of the company.

Are often expressed in the mission statement.

Objectives: Are the short term goals of an

organization. They are based on the

company’s aims. They are quantifiable

(measurable)

Remember: The main difference between

the two is the time scale. Aims are vague, objectives are

more specific. …

3a. Short-term vs Long Term Objectives

What does strategy mean? A plan or scheme to achieve what?

• Long term aims of a business.

It is used to achieve strategic objectives. What does tactics mean?

The short-term ways that firms use to achieve their aims and objectives.

Both strategy and tactics will answer the question…what question will it answer?

3. How do we get to where we want to be? …

3b. Short-term vs Long Term Objectives

What might be the several levels of strategy that a business can adopt?

Operational strategies:• The day-to-day methods used to improve the efficiency of a

business.

Generic strategies:• Those that affect the business as a whole

• Such as differentiation

Corporate Strategies:• Aimed at the long-term objectives of a business.

• Aiming for market dominance – seek ways in doing so.

• Mergers, takeovers of rivals etc.

• …

4. Tactical Objectives

So what are tactical/operational/secondary objectives? Are short-term objectives that affect a segment of the

organization.• For example, a sales department will set its own objectives.

The main tactical objective for many businesses is survival.

A second tactical objective might be sales revenue maximization.

Maximize their sales. Remember: sales revenue is not PROFIT. …

5. Strategic Objectives What are strategic/primary objectives?

Are long-term aims of a business organization.• Targets for the next couple of years.

1. Profit maximization:• Making as much profit as possible.

2. Growth:• Measured by an increase in sales or by market share• Benefits of growth include:

• Economies of scale, lower average cost of production.• Market power, more monopoly, charge higher prices.• Reduced risks, diversification; helps reduce risk.

3. Image and Reputation• Having a bad image may turn customers away.• Must also consider the NEEDS of the customer.• Having a good reputation, people will want to do business with you.

4. Market standing Refers to the extent which a firm has presence in the marketplace.

• Microsoft has high market standing for being number one in the computer software industry.

• Walmart, the world’s largest retailer.• Toyota• The Body Shop. …

6a. Ethical Objectives What are ethical objectives?

They are the moral principles that guide decision-making strategy. Morals are concerned with what is right and wrong, from a society’s point of

view. Examples of ethical objectives:

Reducing pollution Increase recycling Friendly waste disposal Treating employees well. Fairer trade conditions.

Pressure from within or outside the business to act ethically may occur. Some examples of Unethical business behavior:

Financial dishonesty Environmental neglect Exploitation of workers Exploitation of suppliers Exploitation of customers …

6b. How to Achieve Ethical Objectives

How can we achieve this? Well, a number of businesses have to adopt an ethical

code of practice. This should be published in the mission statement or

annual report.• What is this ethical code of practice?

• Documented beliefs and philosophies

• Guidelines and expectations on employee behavior.

Let’s look at box 1.3a on pg. 49.

6c. Advantages / Limitations

Advantages: Improved corporate image. Increased customer loyalty. Cost cutting. Improved staff motivation. Improved staff morale. Providing accurate information

and labeling. Active community work. Having consideration for the

environment. Adhering to fair employment

practices.

Limitations: Compliance costs. Lower profits. Stakeholder conflicts.

Note: Ethical behavior is very subjective. What is right or wrong?

• Depends on the individual. Laws have been put in place to correct

this.• Anti-discrimination laws.

• Health and Safety at Work Laws.

Lets look at 1.3.3 pg 51

Business and Management:

1.3 Organizational Objectives

Lesson 3

Pages 44 - 50

1. Focus Questions

1. What does it mean to have corporate social responsibility?

2. What are social and environmental audits and how are they conducted?

…

2. Corporate Social Responsibility (CSR)

So what are socially responsible firms? Firms that act morally towards stakeholders, employees, and local

community. So how can firms be socially responsible?

• Post-tax profits to charity.• Help clean up the environment.

One benefit of practicing CSR is increased reputation. Why is this important?

• To obtain a competitive advantage.• …

3a. Differing Views about CSR

Free Market or Non-compliance: Is the role of business solely to generate profits for their owners? Should governments, rather than businesses be responsible for sorting

out social problems?

• This views reasoning is that by pursuing the profit motive, firms will be more efficient and prosperous, thus helping society indirectly (job creation and corporate taxes).

• Is this always the case?

• What has happened recently?...

3b. Differing Views about CSR

Altruistic CSR Attitude: What is altruism?

• Refers to acting in a humanitarian and unselfish manner.• Do businesses really help society?

• Do they try to improve society?

• Which companies do what they can to improve the society, regardless of whether their actions help to increase their profits?

• Charities

• Local community projects…

3c. Differing Views about CSR

Strategic CSR Attitude: What does this view entail?

• Argues that businesses should be socially responsible ONLY if such actions help the business to become more profitable (used as a method of long term growth).

So, how can we monitor companies to practice CSR? How can practice this in other countries? Is it possible?

What is considered acceptable in one country may be totally undesirable in others.• In some Asian countries cigarette and liquor commercials are everywhere,

where as in North America they are banned. Do managers have a role in CSR?

How so?• Promote and encourage CSR in the workplace.

• Box 1.3b gives examples of other means. To what extent is a firm able to act socially responsible? (7 factors )…

4a. Social Auditing Let’s recap:

Why do corporations get involved in CSR?

• To enhance their corporate image and reputation. So…what is Social Auditing?

Is a way to ensure that SR objectives are being implemented.

• Social audit: is an independent assessment of how a firm’s actions affect society.

The audit will review a firms: Environmental impact (pollution and waste levels) Staff management (health and safety)

What is an environmental audit? an independent review of a firms impact on the environment.

• What are 5 key parts of social auditing for a firm to devise policies that deal with its impact on society?

• See page 53. …

4b. Social Auditing…the limitations

What are the limitations of Social Auditing?

Auditor charge a feeContents of the review may not be positive; could affect

the public image and reputation of the company.…

5. Organizational Objectives and Business Strategy

“Successful businesses have a clear vision of their aspirations and a mission that outlines their ultimate purpose.” The performance of a business can be judged by the extent to which it achieves its

objectives. Peter Drucker? Have you ever heard of this guy? Stated that organizational objectives be SMART What does it mean to set SMART objectives?

Read pg. 56-57 to find out more. :P Need to be:

Specific Measurable Agreed Realistic Time constrained …