Business Aims and Objectives

1. Business Aims and Objectives Unit 1.3

2. Bellwork • Internet search, pick a company/organization that you have an interest in, find it’s Mission Statement, Be ready to share it with the class.

3. Questions for a Business Where are we now? Where do we want to be? What is our target? What is our purpose? How do we get there? How do we know we are there?

4. Vision & Mission Statements – What Are They? Vision – If you have a vision, what would that be? Vision Statement – Vision or Aspiration of a business – Where does it want to be in the long run. If the business would consider itself a success, what would that look like. Ex. Apple, PVHS, Jaguars, Sharks

5. Vision/Mission of Business • Experts say need a clear vision to achieve success and top performance and a mission to outline their purpose • Aims and Objectives are the starting point to success • Strategies can be devised to achieve targets • Performance judged if achieved objectives

6. Mission Statements • Description of the overall aims of the business • Examples - Bellwork • Aimed at the stakeholders of the business • Each stakeholder group has different objectives for a business • Workers • Management • Stockholders • Suppliers • Local community • Government

7. Mission Statement How is the “vision” going to be achieved? What is the purpose of the business? Does NOT have a time frame Qualitative NOT Quantitative Clearly defined and realistic and achievable Unifies all employees – This is our vision, this is our mission to achieve our vision

8. How Useful Are Mission Statements? • Mission Statements • Help the business to focus • Provide a plan for the future • Make it clear to stakeholders what the business is trying to achieve

9. Critics say Public relations stunt Only purpose of business is to make a profit Time consuming Costs money How can you create one statement that addresses all facets of a business How can you get all employees on board – What about pt employees/contractors?

10. Difference between Vision & Mission Statements • Vision Statements – very long term • Mission Statements – medium to long-term • Mission statements revised periodically • Vision Statements – no set targets • What could be become • Mission Statements usually outline values of the business, beliefs, principles • Sets the tone for how employees & mgrs behave

11. Case Study Pg. 44 in packet With a partner – read and answer the questions. 1 paper per 2 students

12. Corporate Aims • Long term goals of a business. • What it is that you really want to achieve in the long term? • Aims usually express in the Mission Statement • Set/established by Board of Directors • Unquantifiable, vague

13. Objectives – Everyone needs them • Why? • Gives a direction, purpose and unity (we are all in this together) • Helps in making decisions on how to get where we want to be • Allow for a way to measure performance of workers, management and the business

14. Business Objectives • Short term and more specific • Based on and allow the business to achieve its aims • Quantifiable or measurable • Performance of the business can be assessed by how effectively it achieves its objectives

15. What Makes an Objective Effective? • “SMART” Objectives (Peter Drucker) • Specific – precise not vague • Measurable – quantifiable (Ex. Increase market share, raise sales, reduce staff absences by a certain amount • Agreed – accepted & understood by everyone in the organization • Realistic – must be achievable • Time Specific - within the timeframe set

16. Types of Objectives • Operational/Tactical Objectives – Short term that affect a segment of an organization, (department) Targets set for the 6-12 month time range. • Strategic Objectives (primary) – longer range – targets for next few years

17. Common Business Objectives • Survival (tactical) • During early stages of business • When trading becomes difficult • Threat of takeover • Sales Revenue maximization (tactical) • Profit (strategic) • Growth (strategic) • Increasing shareholder value (strategic)

18. Survival (tactical) • Begin Small • Early Problems • Lack of experience • Lack of resources • Competition from established firms • Unexpected costs • Limited recognition by customers • Make wrong decisions

19. Sales Revenue Maximization (tactical) • DIFFERENT from PROFIT Maximization • Get the highest possible sales revenue • Salaries linked to sales

20. Profit (strategic) • Profit Maximize • Difference between total revenue earned and the total costs of the products sold is the greatest. • OR • Satisfactory level of profit – More reasonable

21. Objectives for Small Firms • Maybe don’t want profit maximization • Too many employees needed to hire • More decisions, longer hours • Happy with moderate profits/current lifestyle • Information – Don’t know what level of output is needed • Sacrifice short term for long term profit for long term profit (Chipotle)

22. Growth (strategic) • If don’t grow, lose competitiveness • If grow can enjoy monopoly power/raise prices Microsoft???? Market power • If grow, can diversify into alternative markets • Economy of scale – Lower average costs of production, borrow money at lower costs, lower unit costs- improves price competitiveness • More jobs – job security • Managers/directors – more power • Salaries of Mgmt. higher • Reduce risks – Growth through diversification

23. Strategic Objective (cont.) • Image & Reputation - Enhancement of • Bad image – turns customers away • Positive image – increases employee motivation • Attracts higher caliber employees • Suppliers prefer to deal with reputable/reliable companies • Famous Blunders??? Any come to mind?

24. Image & Reputation • Why Do They Care • Legislation passed in favor of consumer • Changes in Social Attitude • Competitive pressure – now must recognize the needs of others • What if the company has a bad reputation? • Employees/legislation – Disability Discrimination Act, Unions

25. Strategic Objectives (cont.) • Market Standings – presence in the marketplace • Company is perceived as offering something special • Microsoft, Walmart • Any other that you can think of?

26. Increasing Shareholder Value (strategic) • Run the business to increase share price and therefore increase dividends. • Increase the demand for the stock if Company is expected to grow

27. Managerial Objectives • Happens if you have “divorce of ownership and control” • Many owners (public limited companies) • Limited hands-on by owners • High Salaries • High Budgets for each department • Status and recognition • Manage large # of staff • Maximize leisure time • Delegate much of the work • Maximize fringe benefits –expense accounts

28. Behavioral Theories • Business Objectives not determined by owners and managers alone. • Stakeholders may affect the objectives • Government • Consumers • Pressure groups • Group with the most influence achieves it’s objectives. (Animal Rights Groups – fur)

29. Objectives in the Public Sector • In the Past • Supply a public service – inefficient • Profit not a motive • Now – Accountability is a factor • More businesslike • Operate efficiently • Cost effective • Quality Service • Now – Private sector business techniques • Marketing, business planning, budgeting

30. What Determines/Affects Business Aims & Objectives • Internal • Corporate Culture – accepted norms & customs of a business & workforce (flexible/adaptable to change) • Type & Size of Organ. – Change in legal structure may change objectives • Age of Business – New (survival, break-even) established (market leader, corporate growth) • Finance – determines scale of objectives Ex. Expand overseas, need $$$$$

31. What Determines/Affects Business Aims & Objectives • Risk Profile of Stakeholders – Managers & owners willing to take a risk, more ambitious • Private vs. public sector organizations • Public sector not striving for profit maximization • Long and short term objectives • External & Internal Pressures • EXTERNAL • State of the Economy – boom time opportunity for growth, slumps many threats • Government Constraints – Ex. Environment protection laws, impact fees

32. What Determines/Affects Business Aims & Objectives • EXTERNAL (cont) • Presence & power of pressure groups • Can harm co. images, causes a review of ethics • Any changes in the above may result in changes in corporate strategy

33. Case Study - Lenovo Pg. 47 With a partner