1. IB Business Management
Unit 1/Section 1.3
Organizational Objectives

2. 1.3 organizational objectives On completing this chapter you should be able to
Explain the definitions and roles of a vision and mission statement.
Define aims, objectives, strategies, and tactics and explain their relationships.
Examine and justify the need for organizations to change objectives and innovate in response to changes in internal and external environments.
Describe Ethical objectives and corporate social responsibility (CSR)
Discuss the reasons why organizations set ethical objectives and the impact of implementing them.
Examine the evolving role and nature of CSR
Prepare a Swot analysis of a given organization
Prepare the Ansoff matrix for different growth strategies of a given organization

3. THE VISION STATEMENT
A philosophy, vision or set of principles which steers the direction and behavior of an organization.
Outlines an organizations aspirations in the distant future
What do we want to become?
Focused on the very long term
Allow people to see what could be (inspirational)
Outlines the values, beliefs & guiding principles

4. THE MISSION STATEMENT
A simple declaration of the underlying purpose of an organization´s existence and its core values.
What is our business? Distinguishes an organization from others
Focus on the medium – long term.
More grounded in the aim of accomplishing objectives
Qualitative rather than quantitative.
Clearly defined and realistically achievable
Provides direction & guides decision making
Unifies all people and corporate cultures to achieve the vision.

5. COMPARISION MISSION - VISION
Concept
What do we Want?
Why are we doing what we are doing?
Purpose
Points to the future – what the business would like to see itself as.
Based on where the business is now. What needs to be done in order to achieve the mission.
Audiences
Internal Stakeholders- Inspires and motivates employees.
External stakeholders – binds the to the business by giving a sense of shared beliefs
Internal stakeholders – provides a means for accountability by defining key performance indicators.
External Stakeholders –measures how successful the business is in achieving its vision
Change
An expression of the business core values – should never change.
May change to meet new circumstances.

6. EXAMPLES VISION -MISSION STATEMENTS
MICROSOFT:
VISION: A PERSONAL COMPUTER IN EVERY HOME RUNNING MICROSOFT SOFTWARE.
MISSION: TO ENABLE PEOPLE AND BUSINESSES THROUGHOUT THE WORLD TO REALIZE THEIR FULL POTENTIAL.
TOYOTA USA:
VISION: TO BE THE MOST SUCCESSFUL AND RESPECTED CAR COMPANY IN AMERICA
MISSION: TO ATTRACT AND ATTAIN CUSTOMERS WITH HIGH-VALUED PRODUCTS AND SERVICES AND THE MOST SATISFYING OWNERSHIP EXPERIENCE IN AMERICA.

7. AIMS, OBJECTIVES, STRATEGIES
AND TACTICS
Concepts are linked and interdependent
Aims: Long – term goals, what it wants to achieve in the future. Serve to give general purpose and direction. The vision statement is a summary of these aims.
Objectives: Medium to short- term goals that clarify how an organization will achieve its aims and reach its vision. Concrete and can be translated into something specific and measurable.
Aims
Objectives
What the business wants to achieve
What the business has to do to achieve the aims
Not necessarily time-bound
Time-bound
Vague or abstract goal
Specific and measurable target
What a business wants to happen
What a business needs to happen
Set by Senior Leaders
Set by managers or their subordinates.

8. HIERARCHY OF OBJECTIVES
Summary of Aims (Vision): Set by the CEO, few in #, general
Strategic Objectives: Medium to long term objectives/goals set by senior managers to guide the company in the right direction to achieve the aims.
Tactical Objectives: Medium to short-term objectives/goals set by middle managers to achieve the strategic objectives. Greater in #. specific goals that guide the functioning of a section of the organization (department or operations).
Operational Objectives: Day to day objectives set by floor managers or the workers themselves, so that the company can reach its tactical objectives.

9. BUSINESS OBJECTIVES SHOULD BE SMART
Specific: Clear and well defined.
Measurable: To be verified if achieved.
Achievable: So they can be motivational
Relevant: To the main purpose
Time-specific: Deadline

10. STRATEGIES AND TACTICS
BUSINESS STRATEGY:
A plan to achieve a strategic objective in order to work towards the aims of the business. The actions that facilitate an organization to meet it goals. Medium to long term. Senior managers make decisions approved by the owners or CEO.
BUSINESS TACTIC:
A plan to achieve a tactical objective in order to work towards the strategies of the business. Short term methods/actions to achieve a tactical objective to work towards the strategies of the business. Middle managers make decisions approved by senior managers.

11. Corporate aims of Domestic Detergents Inc.
IN CLASS WORKSHOP- 20 MARKS
Define the term Vision statement & Mission statement. AO1- 4
Visit and explain the mission statements of two famous leaders. Define your own values and build your personal mission statement/ vision statement. AO2 - 6
Examine the role of one vision statement from the following companies: BMW/Coca Cola/Google/Mary Key Cosmetics/Microsoft/ Disney/ Amazon. Explain what do the vision statement reveals about the aims and attitudes of the organization. AO3 - 5
Read the case study below and explain to what extent are the corporate objectives for Domestic Detergents SMART objectives? AO2-5
Corporate aims of Domestic Detergents Inc.
To increase annual sales from $1 billion to $2 billion in five years.
To enter a new market every 18–24 months.
To achieve 30% of sales each year from products not in the company’s product line five years earlier.
To be the lowest cost, highest quality producer in the household products industry.
To achieve a 15% average annual growth in sales, profit and earnings per share.

12. Read the case study below and then answer the questions that follow
Read the case study below and then answer the questions that follow. 18 MARKS
(ACTIVITY 3.3 Cambridge)
Reuters achieving its aims: Reuters, one of the world’s largest news agencies, has returned to profitability after several years of losses. It aims to increase value for shareholders and the fact that Reuters shares have risen 7% faster than average share prices suggests that the company is becoming increasingly successful. Profits are being made for two main reasons. Many jobs have been lost in the company in recent years as a result of chief executive Tom Glocer’s policy of cutting costs. Secondly, an ambitious growth objective has been established to increase sales and this target is being reached. New products – such as electronic trading – and new markets – such as China, Russia and India – have allowed an increase in sales of over 6% this year. This is above the growth target that was set. Some analysts are predicting a 40% increase in profit for the company next year. Source: business.timesonline.co.uk (adapted)
Explain what evidence is there that Reuters is meeting its objectives. [4]
Explain two benefits to the managers and other employees of the company from having clearly stated company aims and objectives. [6]
Define what extent does the policy of increasing shareholder value conflict with other objectives the business might have. [8]

13. THE NEED FOR ORGANIZATIONS TO CHANGE OBJECTIVES
Businesses often need to change strategic, tactical and operational objectives due to changes in:
Internal environment: Leadership, HR, type and size of organization (changes in legal structure, mergers, acquisition), product, finance, operations.
External environment: STEEPLE ANALYSIS
Social (demographic or cultural change)
Technological (products become obsolete or uncompetitive)
Economic (state of the economy, market conditions)
Ethical (the values of society)
Political
Legal (government constraints, regulations, taxes)
Ecological (environmental awareness, sustainability)

14. WHY ORGANIZATIONS SET ETHICAL OBJECTIVES
Ethics: The moral principles that guide decision making and strategy.
Morals: What is considered to be right or wrong form society´s point of view.
Business Ethics: The actions of people and organizations that are considered to be morally correct.
Ethical objectives: Goals based on established codes of behaviour that, when met, allow the business to provide some social or environmental benefit or at least, not to hurt society or the environment in the process of making a profit.

15. Why organizations set ethical objectives:
The impact of implementing ethical objectives:
Building customer loyalty
Customers will develop brand loyalty.
Satisfying customers ever- higher expectations for ethical behaviour
Suppliers will have to respond.
Creating a positive image
Competitors: change to maintain market position. Pressure to rival businesses to adopt.
Developing a positive work environment
Local community: better relations – good will.
Reducing the risk of legal compensation
Government, foster ethical objectives.
Increasing profit.
The business itself: costs may rise, and employees may resist change.

16. ACTIVITY 3.5 Read the case study below and then answer the questions that follow. – Cambridge. Siam Cement Group (SCG)
The SCG has a strict ethical code of conduct. Its key features are shown in the table below.
Business ethics
Code of conduct
● Fairness to all who have business relationships with the company, including society and environment.
● Making business gains in a proper manner.
● No alliances with political parties.
● Non-discriminatory treatment of all staff and stakeholder groups.
● Upholding the principles of honesty and fairness.
● Protecting the properties and reputation of SCG.
● Conducting business in the best interests of SCG and its stakeholders.
● Behaving appropriately at all times towards others.

17. CORPORATE SOCIAL RESPONSIBILITY (CSR)
CSR is the concept that a business has an obligation to operate in a way that will have a positive impact on society.
It differs from ethical objectives in the way that these are specific goals that a business may set for itself based on established codes of behaviour.
CSR is broader and less specific than ethical objectives.
By recognizing its CSR, a business is more than likely to have a sustainable business model and act as a good corporate citizen.

18. SWOT ANALYSIS Is the first stage in the planning process.
A business tool created to help business set objectives & decision making.
It can be used to asses the current and future situation of a product, brand, business, proposal or decision.
Is based on perception: the wider the sources & more reliable the data the stronger will be the analysis of the SWOT factors.
Positive Factors
Negative Factors
Internal To Business (current) compared with competitors
Strengths: Helps achieve its objectives
Weaknesses: prevent or delay from achieving its goal.
External factors to Business (possibilities in the future)
Opportunities: Prospects for future development.
Threats: Stop the prospects.

19. EXAMPLE SWOT ANALYSIS
APPLE INC.

20. SWOT ANALYSIS AND MARKET POSITION
Strengths
Weaknesses
Opportunities
Growth Strategies: Combine strengths of business with market opportunities. Short term.
Reorientation Strategies: Address the weaknesses in order to use them for opportunities in the market.
Threats
Defusing Strategies: Eliminate threats in the market by focusing on strengths of business.
Defensive Strategies: Threats & Weaknesses exist in combination. Short term.

21. RE-ORIENTATING STRATEGIES
EXAMPLE SWOT ANALYSIS
RE-ORIENTATING STRATEGIES
APPLE INC.

22. ANSOFF MATRIX
Business tool to help plan and set objectives, to help plan growth strategies.
Looks at the growth potential in terms of the market and product.
Products
Existing
New
Market Penetration: Growth by increasing market share.
-growth potential of market
-strength of customer loyalty
-power and ability of competitors)
(Minimal Risk)
Product Development: New products for existing market -upgrades or variations
-effective market research
-strong research and development system
-first mover advantage
(Medium risk)
Market Development: Selling existing products in new markets or new market segments.
-local knowledge
-effective distribution channel)
(Medium risk).
Diversification: New product in new market.
-due diligence to determine attractiveness & cost of entering the market
-recognition of existing business
-possible tie –ups with other business
(High risk) Ma
rket s

23. EXAMPLE ANSOFF MATRIX - COCA COLA

24. IN CLASS WORKSHOP- 30 MARKS
1. Choose a well-known business in the tourism or food sectors. and complete a SWOT analysis/ Ansoff matrix for that business.
2. State four factors that would help to ensure that corporate objectives were effective in assisting a business to achieve its aim.
3. Explain, with two examples, what corporate objectives a car manufacturing business could establish.
4. Why might the objective of increasing shareholder value conflict with corporate social responsibility?
5. Why are more companies adopting objectives that include corporate social responsibility?
6. Using a business example from your own country, explain why its key corporate objectives might change over time.