Organization Objectives & Stakeholders 1.3-Organizational Objectives and Stakeholders

What is an objective? A business aim helps to direct, control, and review the success activity. There must be an appropriate strategy (detailed plan of action) in place to ensure that resources are correctly directed towards the final goal. This strategy should be constantly reviewed to check to see if the business is on target to achieve its objectives. The most effective business objectibes usually meet SMART criteria:

Specific Measurable Achievable Realistic or Relevant Time Specific SMART Effective objectives are SMART Specific Measurable Achievable Realistic or Relevant Time Specific

Hierarchy of objectives: AIM MISSION CORPORATE OBJECTIVES DIVISIONAL OBJECTIVES DEPARTMENTAL OBJECTIVES INDIVIDUAL TARGETS

Vision Statement A statement of what the organization would like to achieve or accomplish in the long term. McDonald’s Vision Statement: “Where the world buys more McDonald’s than any other fast food”

Mission Statement A statement of the business’s core aims, phrased in a way to motivate employees and stimulate interest by outside groups. McDonald’s Mission Statement: “McDonald’s aims to be the world’s best quick service restaurant experience. Being the best means providing outstanding quality, service, cleanliness and value so that we make every customer in every restaurant smile.”

Difference of Vision vs Mission Vision statement describes the future if the mission is accomplished. Mission statement outlines the purpose of the organization. What we do For whom we do it What is the benefit

Objectives Contain the details of how a company is going to achieve its mission. Strategic (Corporate) Objectives Tactical (Operational) Objectives

Strategic (Corporate) Objectives Broadly defined targets that a business must reach to achieve its overall aim; high-risk, long-term, set by board of directors or senior management, difficult to reverse course. Common objectives include: Profit Maximization Profit Satisficing Growth Increasing Market Share Survival Corporate Social Responsibility (CSR)

Tactical (Operational) Objectives Short or medium-term goals that must be achieved for an organization to meet its strategic (corporate) objectives. Set by Senior Managers Once Tactical (Operational/Divisional) objectives have been set, these can be further divided into departmental objectives and then budgets and targets for individual workers. Called MbO (Management by Objectives).

Ethical Objectives Objectives based upon a moral code for a business. “Doing the right thing” while conducting business. Is a business being socially responsible and at what cost? Does ethics guide the business decisions?

Stakeholders Not to be confused with Shareholders. Shareholders own a share in the company. Stakeholder is anyone with an interest in the business activity.

Environmental/Social Audits An “audit” is an Independent check. Environmental Audit assesses the impact of a business’s impact on the environment. Social Audit is an independent report on the impact a business has on society. (May include pollution, health and safety records, source of supplies, customer satisfaction, and contribution to the community).

HL **Changes in Corporate Responsibility Societal Norms focus on the Stakeholders (rather than Shareholders) Publicity (from pressure groups) Environmentally Sustainable Growth Global Concern over Climate Change Legal Changes (local, national, EU) have forced businesses to avoid bad practices such as low wages.

Chapter 4-Stakeholders Internal Stakeholders: Employees Managers Shareholders External Stakeholders: Suppliers Customers Competitors Government Special Interest Groups Banks and creditors, pressure groups

Activity-Starbucks vs Nordstrom orGo to www.samples-help.org.uk 1. Select a corporate mission statement 2. Evaluate its usefulness Does it address/answer: What do we do For whom do we do it What is the benefit 3. How will it affect or impact three different stakeholder groups?

Stakeholder Conflict Business decisions and activities can have both positive and negative effect on stakeholders. Conflicts of interest occur when one side is negatively affected.

Business Decisions or Activities that may have an impact: Expansion of a business Takeover of a competing firm New IT introduced into production methods

HL-Stakeholder Conflict Methods of Conflict Resolution Arbitration Worker Participation Profit Sharing Schemes Share Ownership Schemes What are the advantages and disadvantages of each?