BUSINESS STRATEGY Chapter 1-Objectives Chapter 1-Objectives Learning outcomes

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BUSINESS STRATEGY

Chapter 1- Objectives

Lecturer: PHD. PHẠM QUỐC KHÁNHB ki A d (Vi t )Banking Academy (Vietnam)[email protected] or [email protected]

Mobile: 0913210000

Chapter 1- Objectives Learning outcomes

After finishing this chapter, you will be able to set-up objectives in different levels for a companyup objectives in different levels for a company.– The importance of objectives in the formulation of

strategy, and the functions that they fulfill– The hierarchy of objectives within an organisation– The stages involved in setting meaningful objectives– The purpose of a mission and the possible componentsThe purpose of a mission and the possible components

of an organisation's mission statement– The differences between corporate, functional and

individual objectives and examples of each– The influence of stakeholders on strategy formulation

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Chapter 1- Objective

The role and The role and functionfunction Other objectivesOther objectives

StakeholdersStakeholders MissionMission

Chapter 1- Objectives11-- The role & function of objectivesThe role & function of objectives

Definition: Objectives/Goals are the specific

outcomes that an organisation wishes to achieve

by carrying out its activities.

Central role in strategy formulation.

Stating as precisely as possible.

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Chapter 1- Objectives11-- The role & function of objectivesThe role & function of objectives

Provide direction for allocating company’s resourcesresources.Enable to break down objectives.What action needs to be takes.A focus for all activity.T t f d t t d i di id lTargets for departments and individuals.Tools for control and supervision.Tools for evaluating the success of a company….

Chapter 1- Objectives22-- A hierarchy of objectivesA hierarchy of objectives

Chapter 1- Objectives 1- Role and function of the objectives

A hierarchy of objectivesA hierarchy of objectivesMissionMission

GoalsGoals

StrategiesStrategies

Strategic analysis

Choices

What business are we in?

Where are we going?

Which routes have we selected?

PoliciesPolicies

DecisionsDecisions

ActionsActions

Implementation

What sort of framework is needed?

What choice do we have?

How shall we do it?

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A hierarchy of objectivesA hierarchy of objectives

Objectives should be illustrated in different levels/ types for understanding/ planning/ monitoring/ measuring.

Company level- Department level- Team/staff levellevel.Long term- Medium term- Short term.Objective tree depend on business scale.


• Corporate objectives should relate to those f t th t d t i i ti 'factors that determine an organisation's success.

Market share Growth Profitability

Growth in Cash flow Survival payments to

shareholders

Customer satisfaction

Quality of products/services

Industrial relations.

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Strategy

TacticTactic

Actions



Corporate

objectives

Marketing

Department

objectives

Product 1

objectives

Product 2

objectives

S l

Activity 2 (page 5).

HR Department

objectives

Salary

objectives

Recruitment

objectives

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Activity 2 (page 5).Write down some realistic objective for your study program:a) Long- term (by the end of the academic year)b) M di t (b th d f th t t )b) Medium- term (by the end of the current term)c) Short- term (by the end of the next week)

Try to place these into a hierarchy/ tree Try to place these into a hierarchy/ tree to see how they relate to each other.to see how they relate to each other.

Chapter 1- Objectives Company’s Company’s VisionVision

“What do we want to become?”What do we want to become?

Vision example:

Techcombank aspires to be the best bank and a leading business in Vietnam.

Vietinbank become one of the most modern and efective financial and banking group in and outside the country.

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Chapter 1- Objectives Company’s Company’s VisionVision

“What do we want to become?”What do we want to become?

Kinhdo foodstuff Company - Living Fine:

• Kinh Do enriches people's lives by providing products and serviceswhich immediately realize the needs and desires for Living Fine.•Applying our dynamism, creativity, foresight and other corevalues, we create products and services which deliver consumerswhat they want and make us all proud.• People trust Kinh Do companies, products and services so muchthey rely on them for Fine Living every day.• Kinh Do generates bonus personal, economic and commercialvalue and pride for staff, partners and stakeholders.


Business goals and objectivesBusiness goals and objectives

VisionVision

“What do we want to become?”

Shared VisionCreates harmony of interestsReduce daily samenessProvides opportunity & challenge

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Chapter 1- ObjectivesCompany’s Company’s VisionVision

Components of an effective vision:

Provides future

direction

Expresses a consumer benefit

Is realistic

Is motivating Must be fully communicated

Consistently followed and measured


Business goals and objectivesBusiness goals and objectives

Primary and secondary objectives

Long‐term and short‐term objectives

Financial objectives

Multiples objectives

Corporate and unit objectives

Technological objectives

Product‐market objectives

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Setting objectives processSetting objectives process

• What do we want to archive?Agree the objectives

• How important are they?Prioritise the objectives

• What has to be done to archive the objective?Define the act. and task

A t d d f • How will we be able to tell that the tasks have been completed to a satisfactory standards?

Agree standards of performance

• Who should perform the required tasks?Allocate roles

• At what stages will we be able to identify that things are being done to standard and to plan?

Set and timetable performance criteria


Specific

SMART

Specific

Measurable

Timetable

AgreedRealistic

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Setting objectivesSetting objectives

Specific - the objective should state exactly what is to be achieved.

Measurable - an objective should be capable of measurement – sothat it is possible to determine whether (or how far) it has beenachieved.

Achievable - the objective should be realistic given the circumstancesin which it is set and the resources available to the business.

Relevant - objectives should be relevant to the people responsible forachieving them.

Time Bound - objectives should be set with a time-frame in mind.These deadlines also need to be realistic.


Objectives examplesObjectives examples

1. To increase market share within the country to 35% of allsales by the end of the next financial year. This is to beachieved through a combination of product development andintensive marketing.'

2. 'To increase the profitability of the company by 12% over lastyear's figures through improved production methods,increased sales and increased profit margin per sale 'increased sales, and increased profit margin per sale.

3. 'To ensure survival of the organisation by investigating areasthat fit within the mission, yet provide opportunities foradditional activity and income.'

4. 'To invest 5% of profits for each of the next three years in thedevelopment of new and improved product ranges.'

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Chapter 1- Objectives 2- Mission

“What do we want to become?”

Comprehensive

Clear BusinessVision

ComprehensiveMission Statement

“What is our business?


“What is our business?”Clear mission is needed before alternative strategies can be formulated and implemented!

•Enduring statement of purpose

•Distinguishes one firm from another

•Declares the firm’s reason for being

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Benefits from a strong mission

MissionResource Allocation

Unanimity of Purpose

MissionOrganizational Climate

Focal point for work structure


Products

MissionElements

Customers Markets

Employees

ProductsServices

Technology

PublicImage

Self-Concept Philosophy

SurvivalGrowthProfit

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Chapter 1- Objectives Stakeholder analysis

Interests to defend Response risk

Internal stakeholders (employees and

management, etc.)

Internal stakeholders (employees and

management, etc.)

Connected stakeholders (shareholders,

customers, suppliers and financiers, etc.)

Connected stakeholders (shareholders,

customers, suppliers and financiers, etc.)

External stakeholders (community,

government and pressure groups, etc)

External stakeholders (community,

government and pressure groups, etc)


Interests to defend Response riskInterests to defend

• Jobs/careers•Money• Promotion• Benefits

Response risk

• Pursuit of systems goals rather than shareholder interests

• Industrial action•Negative power to

Employees

• Satisfaction •Negative power to impede implementation

• Refusal to relocate• Resignation

s

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Interests to defend Response riskInterests to defend

• Increase in shareholder wealth, measured by profitability P/E

Response risk

• Sell shares (eg to predator) or

• replace management

Sharehold

by profitability, P/E ratios, market capitalisation,dividends and yield

managementers


Interests toInterests to defend

•Goods as promised

Response risk

•Buy elsewhere•Sue/ right to

Clients

promised•Future benefits

•Sue/ right to take legal action

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Documents

BUSINESS STRATEGY Chapter 1-Objectives Chapter 1-Objectives Learning outcomes