1.3: Organisational Objectives (The Ansoff Matrix: (Diversification: high…
1.3: Organisational Objectives
Vision and Mission Statements:
Vision statements outlines an organisation's aspiration. Mission statements are statements regarding the purpose of a business.
Vision = very long time; mission = medium-long term. Mission statements are therefore updated more frequently. Visions are not actual targets to be achieved; missions are guiding principals.
Missions/visions may not be reflective of all stakeholders' beliefs - conflicts must then be resolved through changing views and behaviours to model company values
Aims & Objectives:
Aims = state what an organisation wants (long-term, qualitative, vague), set by senior directors. Objectives = short-medium term, specific targets, help achieve aims, can be set by managers/subordinates.
Aims and objectives: measure and control (set boundaries); motivate; direct.
Strategies and Tactics:
Strategies = plans of action to achieve strategic objectives. Tactics = short-term methods to achieve tactical objectives. Serve the same purpose: how to get a business where it wants to be.
Once a business has set its short- and long-term goals, it can then decide on the most suitable method to achieve said targets.
Levels of business strategy: operational = day-to-day methods used to ^efficiency; generic = affects whole business; corporate = targeted at the long-term goals of a business.
Are short-term, specific goals affecting a portion of the organisation, and which define the daily functioning of certain departments.
Are the longer-term goals of a business which help convert mission statements from a broader vision into more specific plans and projects.
Organisational culture, internal and external factors/shocks and the business sector it operate in affects the aims and objectives set by a business.
The Need for Changing Objectives:
Internal factors include: corporate culture; type and size of organisation; private vs public sector organisations; age of the business; finance; risk profile; crisis management.
External factors include: state of the economy (booms vs slumps); government constraints; the presence and power/strength of pressure groups; new technologies.
Objectives may conflict where one stakeholders groups' objectives clash with another's (e.g. workers wanting better pay/working conditions) - however, managers must base their strategy/tactics on achieving organisational objectives.
Business ethics are the actions of people and organisations that are considered to be morally correct. An ethically and socially responsible business acts morally towards all business stakeholders + the natural enviro.
Pressures for ethical action can be internal and external.
Ethics are the moral principals which guide decision-making and are based on society's views.
Corporate Social Responsibility:
Obligations pertaining to social responsibility are known as Corporate Social Responsibility (CSR)
Three main broad views/attitudes in delivering CSR: self-interest/non-compliance (the success of the business contributes to the economy); altruistic (humanitarian + unselfish behaviour); strategic (CSR only if the business benefits).
A Code of Practice, published in many business' annual reports, outlines the beliefs and policies of the business. It makes known the corporate culture of a business and what is considered acceptable. These values may differ between individuals, hence why a common code of practices provides a framework for consistency + uniformity.
The Evolving Role + Nature of CSR:
Attitudes towards CSR may change overtime in line with societal norms, and its nature is extremely subjective. Such subjectivity and norms then mean that a business will have to appropriate its CSR policies and practices accordingly.
CSR is further complicated for multinational countries, as standards between countries greatly vary. The degree to which a company is socially responsible and managers setting CSR, who have a vested interest in profit, are points of contention.
The evolving role + nature of CSR means that businesses must adapt to meet their social responsibilities, which can be done by: providing accurate information + labelling; adhering to fair employment practices; having consideration for the environment; active community work.
Acting responsibly can help to improve a firm's reputation, but compliance costs can add to expenses. For staff to comply with CSR, they must be convinced it is in their best interest to do so.
Despite the above driving factors, the degree of social responsibility a business acts with can be based on several interrelated factors: the involvement, influence and power of various stakeholders; corporate culture and attitudes towards CSR; societal expectations; media exposure + pressure; experience (response to crises); compliance costs; laws and regulations.
SWOT: strengths, weaknesses (internal); opportunities, threats (external).
An extremely useful analysis tool which can provide a good framework for: competitor analysis; assessing opportunities; risk assessment; reviewing corporate strategy; strategic planning.
During examinations, do not write in tabular form: use bullet points under headings with justifications and reasoning to outline points for a SWOT analysis.
The Ansoff Matrix:
Is an analytical tool used to devise various product and market growth strategies - it displays the different growth strategies a firm can take, depending on the risk factor and overall goals of the business.
From lowest to highest risk: market penetration; market development; product development; diversification.
: a medium-risk growth strategy where existing products are sold in new markets. Can involve international sales or marketing/pricing strategies aimed at different groups. Key: firm is familiar with the product being marketed.
: high-risk growth strategy where new products are sold in new markets. High risk = high profit. Can do so by becoming a holding/parent company.
Related diversification: when a business caters for new customers within the broader confines of the same industry. (Less risky)
Unrelated diversification: where completely new products are sold within untapped markets. (More risky)
Always the riskiest growth strategy - firm is not in familiar territory with little to no market experience.
: medium-risk growth strategy where new products are sold in existing markets. Heavily reliant on product extension strategies and brand development.
: where a business focuses its energy on selling its existing products in its existing markets (^sales or ^frequency of sales), or where it seeks to increase its market share. Holds the lowest risk.
SMART Objectives and Strategic Planning:
SMART objectives are:
A business with an ultimate purpose and aspirations is a successful one - those who incorporate SMART goals as overheads for their strategies can encourage a positive corporate culture while also achieving the main goals of the firm.
Having clearly defined and realistic objectives with sufficient resources to implement appropriate business strategies can make success more likely.
With the growing influence of the media and a greater emphasis on societal issues, social responsibility is becoming increasingly important. A reputation for CSR that exceeds societal norms and expectations can add a competitive edge to a business. CSR can be costly, however.