Organizational Objectives

Organizational Objectives

The Importance of objectives • Give businesses a sense of direction, purpose and unity • Form the foundation of business decision making • Help to encourage strategic thinking • Provide the basis for measuring and controlling the performance of the workforce

Vision statements • A vision statement outlines a business’s aspiration in the distant future • “To be a leading sports brand in the world” is the vision of Adidas • Vision statements relate to attainment of success

Mission statements • A mission statement tends to be a simple declaration that broadly states the underlying purpose of an organization. • “To be a world class institution in nurturing the holistic development of our students” • Clearly defined and realistically achievable • Serve to unify all people and corporate cultures within the workforce

Vision & Mission statements • Vision statements focus on long term whereas mission statements can focus on the medium or long term • Mission statements are updated more frequently than vision statements • Vision statements do not have actual targets • The mission statement tends to highlight the values of the business

Aims • Aims are the general long term goals of an organization. • Broadly expressed and unquantifiable statements • Example, ‘to promote social and environmental integrity’ • Long term aims are usually set by senior directors of a business

Objectives • Objectivesare short term and more specific goals of an organization, based on aims. • For example, for a school ‘to achieve 100% pass are IB examination’ • Setting objectives may be delegated to senior or middle management

Short Term vs Long Term Objectives • Strategy is any plan or scheme to achieve long term aims of business. • Strategy is used for strategic objectives. • Tactics are short-term ways that firms can use to achieve their aims and objectives

Levels of Strategy • Operational strategies are the day-to-day methods to improve efficiency of an organization • Generic strategies are those that affect the business as a whole • Corporate strategies are aimed at the strategic objectives (long-term) of an organization.

Tactical Objectives • Tactical objectives (operational) are short-term objectives that affect a segment of an organization, such a department • Short-term objectives tend to refer to targets set for the next 6-12 months • Example, a tactical objective could to maximize sales revenue

Strategic Objectives • Strategic objectives or primary objectives refer to long term aims of business organization • Examples in next slide

Types of Objectives • Profit maximise. Some business try to profit maximise. • Growth. Many businesses pursue growth for survival. • Increasing shareholder value. Public listed company run the company to increase share price and dividends. • Image and reputation • Market standing is interlinked with corporate image and reputation of a business. • Sales revenue maximization.

The CSR Vineyard • You are an analyst with a private equity firm. • For the first time, your firm is thinking of investing in a business with ethical objectives. • Watch the video to know the company better. • Advise your manager whether to invest in this company.

The CSR Vineyard

Ethical Objectives • Ethics are moral principles that guide decision-making and strategy. • Morals are concerned with what is considered right or wrong from society point of view • Ethical objectives may include: - Reducing pollution by using environmental friendly production methods - recycling of waste materials - disposal of waste in an environmental friendly way - Offer staff sufficient rest breaks during their work shift

Ethical Objectives • Examples of unethical business behaviour - Financial dishonesty - Environmental neglect - Exploitation of the workforce - Exploitation of suppliers. - Exploitation of consumers.

Ethical Objectives Advantages of ethical behaviour Improved corporate image. Increased customer loyalty Improved staff motivation Improved staff moral

Ways to social responsibility • Providing accurate information and labelling • Active community work • Having consideration for the environment. • Adhering to fair employment practices.

Limitations of ethical behaviour • Compliance costs. For example, organic products are more expensive. • Lower profits. • Stakeholder conflict.

Corporate Social Responsibility • Socially responsible firms are businesses that act morally towards their stakeholders. • Free market CSR attitude. Many economists argue that the role of businesses is to generate profits • Altruistic CSR attitude. These businesses do what they can to improve the society • Strategic CSR. Business adopt CSR if such actions help them grow.

Social Auditing • Socially responsible firms are businesses that act morally towards their stakeholders. • Free market CSR attitude. Many economists argue that the role of businesses is to generate profits • Altruistic CSR attitude. These businesses do what they can to improve the society • Strategic CSR. Business adopt CSR if such actions help them grow.

Changes in Corporate Objectives & Strategy (HL) Internal factors: • Corporate culture – norms and customs of a business and its workforce • Type and size of organization • Age of business – any new business will place break-even and survival as their key objectives • Finance • Risk profile of key stakeholders • Private vs Public organizations

Changes in Corporate Objectives & Strategy (HL) External factors: • State of economy – boom or slump • Government constraints – rules and regulations • Pressure groups – may force business to change through lobbying

Changes in Societal Expectation of Business Behaviour • Attitudes towards CSR changes over time. • CSR is a subjective issue – what is right or wrong largely based on public opinion • Pressure groups affect organisational behaviour. • Businesses become more aware of environmental damage

Organizational Objectives