MODULE 1 1.3 Organisational Objectives IB BM UNIT 1

MODULE 1

1.3 Organisational Objectives

IB BM UNIT 1

Corporate Aims & Mission Statements Corporate Aims

Broad statements of intent, usually expressed in vague terms, with no time-scale, or precise target that can be easily measured.

Broad statements of intent, usually expressed in vague terms, with no time-scale, or precise target that can be easily measured.

Most common commercial business aims concern:Most common commercial business aims concern:

• Return on investment, profit or sales maximisation.

• Growth and expansion.

• Market share, market leadership / domination.


Most common commercial business aims concern:Most common commercial business aims concern:

• Customer satisfaction, customer loyalty.

• Quality / value for money.


Other aims concern - Image, social responsibility.

Aims of public sector / non profit making organisations:Aims of public sector / non profit making organisations:

• More socially / community orientated.• Purpose - to provide protection,

support, assistance.• Obligations - still to be efficient and

provide value.


Public SectorPublic SectorPrivate Sector Private Sector

Generate sound return on investment eg Sainsbury’s (PLC)

Be household name eg BT (PLC) Advance education eg private

school.

Corporate Aims & Mission Statements Corporate Aims - Examples

Profit making to:Profit making to:

Private Sector Private Sector

Maximise money raised for cause eg Cancer Research (charity)

Advance religion, eg local church (charity)

Relieve poverty eg Barnados (charity)


Non-profit making to:Non-profit making to:

Private Sector Private Sector


Non-profit making to:Non-profit making to:

Maximise employee welfare eg NUT Conserve environment eg Greenpeace

(charity) Advance education eg Exam board

(trust).

Public SectorPublic Sector

Provide a service to the community eg NHS

Expand knowledge / appreciation of area eg libraries (local govt. – municipal undertaking)



Relieve poverty eg DSS (local government)

Conserve environment eg Dept. of National Heritage (central government)



Maximise employee welfare eg DFEE (central government)

Advance education eg Dept. for Education and employment

(central government).



NB Aims of large organisations in private sector may also be to... NB Aims of large organisations in private sector may also be to...

care for environment, maximise employee welfare, care for environment, maximise employee welfare,

...but these are really subsidiary aims which help to raise their image - support primary aim.

Corporate Aims & Mission Statements Mission and Vision Statements

Common in larger organisations who:Common in larger organisations who:

• serve wide variety of markets.

• cater for wide variety of stakeholders needs.


Describe overall purpose of businessDescribe overall purpose of business

• aspirations

• long-term goals/ aims


Should clarify / clearly communicate the following:Should clarify / clearly communicate the following:

• What business does - main activities.

• What it hopes to achieve.

• Key values.

Corporate Aims & Mission Statements Mission and Vision Statements- the differences

•A mission statement concerns what an organization is all about (in the present).

•A vision statement is what the organization wants to become (so it is more focused on the future).

These objectives should be far more specific: state specific targets that are needed to achieve aim / mission. state specific targets that are needed to achieve aim / mission.

Strategic Objectives

• Should be S.M.A.R.T.• Should be S.M.A.R.T.

ie SpecificMeasurableAgreedRealisticTime-scaled.


Example:

Aim of business - maximise profits / return on investment.

Objectives could be:

Example:

Aim of business - maximise profits / return on investment.

Objectives could be:a. increase sales of product x by

10% and / or

b. reduce labour costs by 5%, by end March next year.

a. increase sales of product x by 10% and / or

b. reduce labour costs by 5%, by end March next year.


These are specific, measurable, time-scaled.These are specific, measurable, time-scaled.

• Past performance of business.

• Current resources.

• External factors affecting future performance.

Are they Realistic?Are they Realistic? Depends on:Depends on:


Objectives should be agreed by key individuals - more likely to be committed to achieve them.

Objectives should be agreed by key individuals - more likely to be committed to achieve them.



• Based on firm’s mission or aims.

• Concern direction of business as a whole.

• Often expressed in financial terms eg to make a certain amount of sales, profit, % rate of return / growth.

• Establish boundaries for departmental objectives.

Departmental/Tactical Objectives

• Operational objectives.

• Must be achieved by particular divisions or departments to ensure corporate objectives met.

Departmental/Tactical Objectives

Achieve a 10% return on capital employedMarketing:

Achieve £50,000 sales per month

Human Resources:Secure 95% staff attendance and 100% punctuality

figures per month

Finance:Gain a 14% average profit margin per month.

Production:Reduce production costs by 10% by March 2001.

Example Example

Mission statements, aims, objectives, help to:Mission statements, aims, objectives, help to:

• Provide common purpose / sense of direction.

• Aid motivation, enhance teamwork.• Co-ordinate employees’ actions/

activities.

• Provide common purpose / sense of direction.

• Aid motivation, enhance teamwork.• Co-ordinate employees’ actions/

activities.

Role of Objectives and Mission Statements

Objectives, in particular, provide:Objectives, in particular, provide:

Role

• Specific targets to focus on - help to motivate employees.

• Means of measuring performance - important for control.

• Driving force for planning - framework for setting strategy.

• Specific targets to focus on - help to motivate employees.

• Means of measuring performance - important for control.

• Driving force for planning - framework for setting strategy.

May be times when business has to change long term goals and concentrate on short term objectives.


The Changing Nature of Objectives

• Age • Size & Legal Status • Ownership• Views of owners / directors /

managers

Factors influencing objectives:




• Consumer tastes • Changes in demand • Market • Political factors





• Legislation • State of the Economy • Social attitudes • Changes in technology • Competition





• Availability of finance• Ease of implementation• Risk • Culture • Other organisational objectives


Documents

MODULE 1 1.3 Organisational Objectives IB BM UNIT 1