Business organization and evironment

1.3 Organizational objectives

Dr. Fereshteh Mohammadian

Vision and Mission

• Vision Statement is more forward looking and speaks to the long-term aims and highest aspirations of a business.

• Mission Statement is more grounded in the aim of accomplishing objectives to achieve the mission, and intermediate step on the way to the vision.

The two statements should complement each other.

Vision Mission

Concept What do we want? What are we doing and why?

Purpose Point to the future. (would like to see) Where the business is now, what needs to be

done in order to achieve the vision.

Audiences To internal stakeholders: inspire and

motivate employees.

For external stakeholders: binds them to

the business by giving a sense of shared

beliefs.

To internal stakeholders: provides a means for

accountability by defining key performance

indicators.

For external stakeholders: measures how

successful the business is at achieving its

vision.

change As an expression of the business core

values, should never change.

In a world of dynamically changing external

environments , a mission statement may need to

be modified to meet new circumstances.

Aims, objectives, strategies, and tactics

• Aims: the long-term goals of business (what it wants to achieve in the future).

• Objectives: the medium- to short term goals that clarify how the business can reach its vision. (a mission summaries the objectives).

• Objectives are in the following three forms:– strategic

– tactical

– operational

Vision and 3 types of objectivesVision (summary of aims)

-long-term and

highest aspiration

Strategic objectives

-long-term goals

-to achieve the

aims

Operational objectives

-day to day goals

-to reach tactical

objectives.

-medium or short term

goals

-to achieve strategic

objectives

Tactical objectives

The hierarchy of objectives

Aim

-a few

-set by entrepreneur or CEO

-should be rather general

e.g.: to be the most

successful car dealership in

the city

Strategic objectives

-more than the aims

-concrete

-set by set by senior managers (directors or

executives)

-SMART objectives

e.g.: to have the highest

market share of car

dealerships in the city

Tactical objectives

-more than the strategic obs.

-set by middle managers

e.g.: to hire and retain

enough salespeople so that

the dealership has sufficient

sales people to serve

customers at all times

Operational objectives

-more than the tactical obs.

-set by floor managers/

workers

e.g.: to have the average

amount of time that a

customer waits to be greeted

by a salesperson to be less

than two minutes

An important difference between aims and objectives is that objectives are

concrete and can translate into something specific and measurable.

SMART Objectives(goals)

• Specific: objectives should relate to the nature of business, clear

and well defined.

• Measurable: objectives should be measurable to see whether they

have been achieved or not?

• Achievable: they should be realistic, can reduce dissonance and

distraction, and can motivate employee.

• Relevant: set objectives for specific employees in their related area

of responsibility.

• Time-specific: they should have a frame of time or deadline.

Business strategy

• A plan to achieve a strategic objective in order to work towards the aims

of the business.

• It is medium to long term and needs to be set by the owners or the

CEOs.

• Strategies are planned and involve careful analysis of:

– Where the business is

– Development of a plan of how to get where the business wants to be(aims)

– How to implement the strategy

– Periodic evaluation process to determine whether the plan is working or after a

specific of time, has worked.

Business tactic

• A plan to achieve tactical objectives in order to work towards business strategies.

• It is short term and should be set by middle managers.

• Easier to change

• Less close to the long term health of the firm and more focus on how to achieve measurable targets within the strategy.

The need for organizations to change objectives

• Businesses often need to change strategic , tactical and day to day objectives.

• The reasons for changing these objectives are:

– The internal environment (refers to changes in the conditions within the business)

– The external environment (refers to changes outside of the business that has a bearing on its operation or performance)

Internal environment changes

• Leadership: change of aims and objectives by changing the leadership and its style

• HR: altering the objectives by changing the conditions related to HR

• Organization: rethinking of objectives through organization’s mergering or

acquisition/ modification of some business aspects by internal pressure /changing

strategic or tactical objectives because of interconnectedness of business function

• Product: change of strategic and tactical objectives for product performance in

marketplace

• Finance: change in strategic and tactical objectives by changing of financial

circumstances (fewer or decreased finance or world recession)

• Operations: changes objectives because of innovating operations (not just

development of production stage or delivering of core service or product) or

everyday reasons(relocation of a factory)

External environment changes (STEEPLE)

• Social: reappraise the objectives by social change(increase the number of women in universities) or cultural change (increased preference for expensive coffees).

• Technological: products can be rendered obsolete or uncompetitive because of technological innovation or development of new methods for cheaper production.

• Economics: changes in market conditions( new competitors) or changes in economy (global financial crisis)

• Ethical: quick or slow changes of social values (ethics in lending, diversity in hiring, attentiveness to sexual harassment, product safety and sustainability)

• Political: drastic political change will put at risk the investment or operations of a business outside or inside home such as election and its effect on the legislature of a country, and sometimes unexpected political change(a scandal, a crime, or even an accident)

• Legal: changes in legislation responsibility from one party or coalition to another or legal environment

• Ecological: growing environment awareness and the “green” revolution (emergence of hybrid cars, products sustainability)

Ethics

Ethics are concerned with what is ‘right’ or

morally correct.

Business ethics are concerned with

the conduct, principles and patterns

of behaviour in business dealings

that involve ‘doing the right thing’.

Ethical behaviour

Examples of ethical behaviour include:

• Not using child labour

• Not testing products on animals

• Respecting the human rights of workers

• Ensuring working hours are not excessive

• Keeping pollution to a minimum

Sustainability

Sustainability it concerned with adopting production

methods so that resources can be used now, but can

also be used by future generations.

Sustainable practices include recycling, minimising

waste and replacing resources where possible e.g.

replanting trees used in paper manufacture.

Corporate social responsibility

Corporate social responsibility is concerned

with the responsibilities of organisations to

have positive impact on the all stakeholders

including the local community, society and

the environment.

A company committed to CSR

is intending to act as a good

“corporate citizen”, and have

more than a sustainable

business model.

Relation between ethical objectives and CSR

• As part of CSR policy, a business can implement a particular ethical objective, for example open an early childhood care center for its employees.

Benefits of ethical behaviour

• Improved reputation and confidence

• Increased ability to attract more customers, workers and investors

• Increased employee motivation

• Can be used as a Unique Selling Point in some markets

SWOT Analysis• The SWOT analysis help that a business set the SMART objectives of its strategic plan.

• First stage in planning purposes which help managers perceive strengths, weaknesses,

opportunities and treats

• Stronger SWOT analysis needs wider sources and more reliable data

Weaknesses

Positive factors Negative factors

Strengths

Opportunities Threats

Internal to the business

External to the business

The SWOT matrix

• Then the purpose of a SWOT analysis is not to brainstorm the strengths and weaknesses of a business strategy itself; it is the first part of the strategy development by identifying the different strengths and weaknesses of the business. Once they are known, the SWOT matrix can be analyzed and so a strategy can be formulated.

SWOT analysis and market position

WO- Reorientation strategies

-positive and long-term

-address of weaknesses to use

available opportunities

Strengths weaknesses

SO - Growth strategies

-the most positive short-term

-confident about no big issues in

any other area

ST-Defusing strategies

-neutral & short-term

-defuse the threats by focusing on

core strengths

WT- Defensive strategies

-the most negative short-term

-at the most

-combination of threats and

weakness

Opportunities

Threats

The Ansoff Matrix

Market penetration-Increase market share by productivity or

Different product for different market

segments

-the growth potential of the market

-the strength of customer loyalty

-the power and ability of competitors

i.e. iTunes for MAC

Product developmentGenuinely or wholly new product/

upgradable products/ product variation

-effective market research

-having strong research & development

system

-having first mover advantages

i.e. iPod for MAC only

Or iPad2, iPad3 and iPad mini

Market developmentNew markets or new market segments

-effective market research

-having local knowledge of new market

-having an effective distribution channel

i.e. iTunes & iPod for Windows

DiversificationLack of familiarity and experience

The untested new product

-effective market research

-testing the attractiveness of the market and

the cost of entering the market

-Recognition of the existing business

-possible tie-ups with experienced

businesses

i.e. iPhone

Pre

sen

tN

ew

Present New

Mar

ket

product

R

R

R