1.3 Organizational objectives
What we will study?
By the end of this unit you should be able to:
- Explain the importance of setting objectives in managing an organisation
- Explain the purpose of mission statements and vision statements
- Distinguish between aims, objectives, strategies and tactics and discuss how these interrelate
- Examine the reasons why organisations set ethical objectives and implement corporate social responsibility strategies
- Discuss why a firm's view of its social responsibilities and strategies towards them may change over time
- Prepare a SWOT analysis for a business situation
- Analyse an organisation's position using a SWOT analysis
- Evaluate the need for firms to change their objectives over time
- Explain and apply the Ansoff Matrix as a decision-making tool
The importance of objectives
When a business first starts trading it has few loyal customers and no reputation. The most likely objective for a start up business is simply survival. As the business grows and begins to win market share, the aim may shift towards expansion and/or increasing profits.
Some owners have a vague idea about their objectives. The best types of objective are SMART. Smart stands for:
Some owners have a vague idea about their objectives. The best types of objective are SMART. Smart stands for:
- Specific: clearly state what is to be achieved, eg increased profits.
- Measurable: the desired outcome is a number value that can be measured, eg increase profits by 10%.
- Agreed: all staff are involved in discussing and agreeing an aim.
- Realistic / Relevant: the target is possible given the market conditions and the staff and financial resources available and relevant to the company
- Timed: the target will be met within a given period of time, eg 12 months.
THE RELATIONSHIP BETWEEN AIMS, OBJECTIVES, STRATEGIES AND TACTICS
Aims: The long-term goals of an organization, often expressed in the organization's mission statement. They are a general statement of an
purpose and intention and tend to be qualitative in nature. Aims are set by the senior directors and management of an organization.
"Our aim is to maximize shareholder value"
Objectives are the relatively short-term targets of an organization. They are expressed as SMART objectives.
"Our objective is to increase the profitability of all divisions by 10 per cent in the 2015/2016 financial year"
Targets are the short-term plan of action that organization's use to achieve their objectives.
"Our target is to increase our market share by 10 per cent and decrease overheads by 5 per cent in the 2015/2016 financial year"
Tactics are the short-term activities that organizations use to achieve their targets.
"We will do this by cutting costs by changing suppliers"
Aims: The long-term goals of an organization, often expressed in the organization's mission statement. They are a general statement of an
purpose and intention and tend to be qualitative in nature. Aims are set by the senior directors and management of an organization.
"Our aim is to maximize shareholder value"
Objectives are the relatively short-term targets of an organization. They are expressed as SMART objectives.
"Our objective is to increase the profitability of all divisions by 10 per cent in the 2015/2016 financial year"
Targets are the short-term plan of action that organization's use to achieve their objectives.
"Our target is to increase our market share by 10 per cent and decrease overheads by 5 per cent in the 2015/2016 financial year"
Tactics are the short-term activities that organizations use to achieve their targets.
"We will do this by cutting costs by changing suppliers"
Why do businesses need ethical objectives?
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Business ethics vs. Corporate social responsibility
Business Ethics is the VERY broad field of study concerning good ethical decision-making in commercial contexts. CSR is more narrowly about a company’s SOCIAL obligations…that is, a company’s obligations to society in general. So, business ethics is concerned with not just social obligations, but also obligations to employees, customers, suppliers and competitors. CSR is about the extent to which companies owe something to “society at large” (i.e., those who do not have a direct involvement with the business).
