BUSINESS & MANAGEMENT

1. BUSINESS & MANAGEMENT Unit 1.3 Organizational Objectives

2. KEY TOPICS Standard Level • The importance of organizational objectives • Mission and vision statements • Organizational aims, strategic objectives and tactical objectives • Ethical objectives • Corporate social responsibility (CSR) • Social and environmental audits Higher Level Extension • Changes in corporate objectives and strategy over time • Changes in society’s expectations of business behavior

3. Key questions a business must ask itself • Where are we now? • Where do we want to be? • How do we get there? • How do we know we are there? This chapter deals with the second question As we will learn different stakeholders want to see a business have different objectives!

4. Explain the importance of objectives in managing an organization • Objectives give businesses a sense of purpose. It can be a unifying and motivating tool for workers. • They are the foundation for business decision-making. Businesses use objectives to form strategies to achieve goals. • Help to encourage strategic thinking(long term planning) • Help workers and managers measure performance.

5. Objectives can be set at different levels • Corporate objectives are for the whole business • Departmental objectives are for a department to achieve to help the corporate objectives • Individual objectives – goals set by a business to see the performance of an employee.

6. Vision Statements Vision statements tell where a company wants to be usually an unrealistic dream. Can be seen as what a business would like to one day achieve. Ex. John’s Bike Repair’s vision statement might be. We make sure everyone can ride their bike.

7. Mission Statement • Explains the direction of the business. • Many times they portray their companies ideals or slogans. • These can be used to explain how the vision statement will be achieved. Why do businesses use mission statements? • Help the business focus • Provide a plan • Tell stakeholders what the business plans to achieve Ex. John’s Bike Repair’s mission statement might be. We just want to fix one bike at a time

8. Microsoft Mission Statement At Microsoft our mission and values are to help people and businesses throughout the world realize their full potential. To bring inspiration and innovation to every athlete in the world. Nike’s Vision statement

9. Differences between vision and mission statements • Vision statements are always long term • Mission statements receive updates more often • Vision statements are unrealistic by nature so it’s like a dream for a business • Mission statements should identify the values of a business Limitations of both • They tend to be only for lip service to the public, employees and pressure groups. • Time consuming for no real purpose • How many employees do you think really believe in the mission statements?

10. Objectives • Business objectives are shorter term goals that the businesses think can be obtained. • They are used to give purpose to the business. • They help to encourage strategic thinking. Ex. John’s Bike Repair’s objective might be We will increase our profit by 8% this year. SMART objectives • Specific - What is trying to be achieved. • Measurable – Objectives need to be able to be measured. • Agreed – Be approved and understood by everyone. • Realistic – Objectives need to be obtainable. • Time specific – A time limit needs to set. Make a smart objective for yourself for this school year____

11. Strategic Objectives- Very long term goals of the business. • Typical Strategic Objectives • Profit maximization – Most business have a long term objective to make the most money. • Growth – is usually measured by an increase of sales or by market share. Benefits of growth • Economies of Scale – Big businesses pay less for things. • Market Power – A large company can charge higher prices. • Reduced risks – Diversification can be achieved. • Image and Reputation – Most businesses try to have a very respectable image to the public. • Market Standing – Is how the world views the business compared to their rivals.

12. Tactical/Operational Objectives • Short term objectives that may only affect a department. • A tactical objective for many business is survival. Ex. John’s bike repair shop may want to cut down on the time it takes to fix a flat tire.

13. Tactics/Strategies • When a business has objectives and an aim then they need tactics/strategies to find out how they will achieve their goals. • These work as the plan for the business. Ex. Johns bike repair might plan to hire another mechanic to cut down on the time it takes to fix a flat tire. Make some tactics that you will use to accomplish your objective. ________________________

14. Different types of strategies to achieve different types of goals Operational Strategies • Day to day methods used to improve the efficiency of a department. Used to achieve short term objectives. Ex. The bike shop may wish to speed up the repair process but not lose quality of the repair. Only the Mechanics (production department) are concerned. Generic Strategies • Affect the business as a whole to meet short or long term objectives. Ex.The bike repair shop may want to improve the overall customer service of the shop. This would involve every department. Corporate strategies • Are the plans the company has to obtain their long term objectives. Ex. If the bike shop wants to be dominate in an area then they might have a corporate strategy to buy all the other bike shops in the area.

15. THE PROCESS Aims for business State what the business wants. Homework: Come up with a strategic and tactical objective for your business and strategies to accomplish them. Long Term Objectives State what a business needs to achieve in order to get what they want Tactics/Strategies The actions that the business will take to meet it’s objectives.

16. Ethical objectives • Ethics the idea that everyone should live a “good life” • Business Ethics are the moral principles that guide decision making and corporate strategy. • Some businesses are pressured to act more ethically by; employees, customers or pressure groups. • Business ethics is subjective. Ex. Nike in Malaysia

17. Ethical ways Business can act • Treating and paying employees fairly (Giving staff breaks) • Trading fairly with less developed countries. • Provide accurate information • Community work • Think about the environment when planning. • Increased recycling • Disposal of waste in a environmentally friendly manor. Financial dishonesty • Some businesses misrepresent their funds. Ex. Lehman Brothers • Some directors of companies take extravagant business expenses • Environmental Neglect - Pollution and depletion of natural resources • Exploitation of workers – Some workers neglect their staff Unethical business practices

18. Advantages of ethical behavior • Improved corporate image • Improved Customer loyalty • Cost cutting – some companies use less packaging for environmental reasons. • Staff motivation can increase – Employees may work harder if they think their business is ethical. • Morale – Employees may feel better about working for a company they feel is ethical. • Drawbacks of ethical behavior • Compliance costs – it can be expensive • Lower profits – some businesses have to choice less money to be ethical. • Stakeholder conflict– Most investors are more concerned with the bottom line than with a company that acts ethically • Laws provide a framework for employers but many times ethical behavior is in the hands of mid and lower managers.

19. Unit 1.3 Key Terms • Aims • Corporate social responsibility • Ethics • Mission statement • Objectives • SMART objectives • Social audit • Social responsibility • Strategy • Tactics • Vision statement