1.3 organizational objectives. vision statement a statement of what the organization would like to...
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1.3 Organizational Objectives
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 and should answer 3 key questions:
What do we do?For whom we do it?What is the benefit ?
Compare the Vision & Mission
Organization Vision Statement Mission Statement
Nokia Our vision is a world where everyone is connected.
Nokia exists to connect people with each other and the information that is important to them with easy-to-use and innovative products. Nokia aims to provide equipment, solutions and services for consumers, network operators and corporations.
Does the mission statement answer the 3 questions?Does the mission statement answer the 3 questions?What do we do?What do we do?For whom do we do it?For whom do we do it?What is the benefit?What is the benefit?
MPHS Mission Statement
We exist to inspire students with a We exist to inspire students with a passion for learning and a commitment passion for learning and a commitment to personal integrity and academic to personal integrity and academic excellence. Students will be excellence. Students will be empowered to become self-confident, empowered to become self-confident, creative, socially responsible and creative, socially responsible and globally aware for learning.globally aware for learning.
What is the point?
Mission and vision statements guide companies in their sense of purpose.
Helps them develop more specific business objectives, too.
Inform outside groups of their purpose.
BUT....They can be too vagueUsed to make stakeholders “feel good”Can be similar to everyone else in the industry
The Hierarchy of Objectives
Hierarchy of Objectives
CorporateObjectives
Divisional Objectives
Individual Targets
Aims
Departmental Objectives
To maximize shareholder value
To increase profits of all divisions by 10% per year
Within one regions, increase market share by 10% and cut overheads by 5%
Marketing: increase profit margin 7% Finance: reduce long-term borrowing 5% R&D: develop one innovating product each year
Marketing: - Increase sales by 5% for each client - Capture 5 new clients each year
Aims, Objectives, Strategies, oh my...
Aims – the core business strategy is expressed
Divisional/Operational Objectives – the starting point to help us reach our aim
Strategy – how to make the objectives happen which can be long-term or short-term (tactical)
Strategic VS Tactical
Strategic – to develop new markets abroad
Tactical- to sell product in different sized packaging
Long term Short to medium term
Difficult to reverse once made – have committed resources to make it happen
Reversible, but there are still costs involved
Directive taken by directors/senior managers
Directive taken by senior managers and subordinates with authority
Cross-functional – involves all major departments (HR, Finance, Mrkting, Operations)
Impact of tactical decisions is often only in one department.
SMART
Effective objectives are SMART
Specific
Measurable
Achievable
Realistic or Relevant
Time Specific
Common Aims for a Corporation
Profit maximizationMake the most profit possible
Problems: short-term high profits may encourage competitors to enter the market
By maximizing profit you may generate less sales reducing your market share
May not be the priority of a small business ownerThis may not make all stakeholders happy.
Profit satisfyingMake enough profit to keep the business owner happy
Common Aims for a CorporationGrowth
Rapid growth can lead to other problemsCan cause loss of focus
Increasing market shareRetailers may be more likely to stock your brandBrand leader status
SurvivalMaximizing short-term sales revenue
Could result in less profit if sales price is reduced to achieve sales increase
Maximizing shareholder valueIncreasing dividends paid and share price benefits
stockholders but may not benefit other stakeholders
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?
Factors Influencing Objectives
Conflicts between objectives Growth vs profit; short-term vs long-term;
stakeholder conflictsCorporate cultureSize and type of business
Large, small, sole proprietorship, corporationPublic or Private sector
New business or well-established
CSR – Corporate Social Responsibility
Why corporations respond:Increasing publicity from pressure groupsUN Millennium Development Goals (120
countries agreed to “environmentally sustainable growth”
Global concern over climate changeLegal changes – no longer can pay low wages
or waive responsibility for your products
Examples of CSR:
Apple, Inc. conducts a social audit of its working conditions in China.
Nike no longer uses child labor in foreign countries.
Can you name others?
Why objectives may change
No longer need to survive; now need to growSenior management may quit causing a refocus
in other areas while a replacement is foundExternal environment may change – their may
be a recessionShort-term objectives may be replaced with
long-term objectivesLaws and regulations may be changed.
Changes should consider:
Is the motivator significant enough to warrant a change in the objectives?
What is the risk of not adapting or responding?
What is the cost or consequences of the new objective for the staff?
Can we manage the change?
INTERNAL
VS
EXTERNAL INFLUENCES
(SWOT)
Internal vs External Constraints
Internal: Your organizations structure Financial considerations Labor Attitudes of workforce – resistant or acceptance of change
External: The current business cycle (prosperity, recession, recovery or
depression) Changes in legislation
SWOT
SWOT Analysis matches its resources and strengths with its competitive environment.
S StrengthsW WeaknessesO OpportunitiesT Threats
Strengths
Internal factors that are advantagesExperienced managementProduct patentsLoyal workforceExtensive product range
Weaknesses
Internal factors that are seen as negativePoorly trained workforceLimited production capacityAging equipment
Opportunities
External factors from market to competitorsNew technologiesExport markets expanding faster than
domestic marketsLower interest ratesIncreased consumer demand
Threats
External factors focused on business and economic environment
New competitors in the marketplaceGlobalization driving prices downChanges in law regarding productChanges in government policy
SWOTStrengths Weaknesses
Opportunities Threats
Inte
rnal
Ext
erna
l
Risky Growth Strategies ?
ANSOFF Matrix
Ansoff's Matrix
A model used to show the degree of risk associated with the four growth strategies:
Market penetration Market development Produce development Diversification
Ansoff's Matrix
Market penetration Achieving higher market shares in
existing markets with existing products.
Sell more of what you already sell to the same people.
This is least risky.
Market Penetration
Ford passing Honda with an eye towards catching Toyota in total market share.
Lowest Risk
Ansoff's Matrix
Market development Selling existing products in new markets.
Sell more of what you already sell to different people – maybe in a different
country or region.
This is more risky.
Market Development
Selling EXISTING products into NEW markets
Burger King expanding into foreign markets. Expecting 80% of new growth to be overseas. High expectations for the Asian market
Moderate Risk
Ansoff's Matrix
Product development Alter an existing product or create a new
product and sell in existing market.
Pepsi created Diet Pepsi and sold the new product into the same market as the old
product.This is even more risky.
Product Development
Developing new products for a market you already serve.
Coke created new products:
Coke ZeroCoke with LimeCherry CokeCaffeine Free Coke
Higher Risk
Ansoff's Matrix
Diversification Selling different, unrelated products in
new markets.
Sell different things to different markets.
This is the MOST risky.
Diversification
Selling different and unrelated goods or services in new markets.
GE (General Electric)
Generation, transmission and distribution of electricity (e.g. nuclear, gas and solar), industrial automation, medical imaging equipment, motors, railway locomotives, aircraft jet engines, and aviation services. It co-owns NBC Universal. Through GE Commercial Finance, GE Consumer Finance, GE Equipment Services, and GE Insurance it offers a range of financial services as well.
Risky
Ansoff’s Matrix
A model used to show risk with the four growth strategies
Market Penetration Sell more in existing markets
Product Development Sell new products in existing markets
Market Development Sell existing products in new markets
Diversification Sell new products in new markets
Lowest Risk
Moderate Risk Risky
Higher Risk
Existing Products New Products
Increased Risk
One does not stand along
An Ansoff matrix cannot be used by itself because it does not examine internal and external influences on a business.
Ansoff MatrixSWOTSTEEPLE
Ansoff’s Matrix
A model used to show risk with the four growth strategies
Market Penetration Sell more in existing markets
Product Development Sell new products in existing markets
Market Development Sell existing products in new markets
Diversification Sell new products in new markets
Lowest Risk
Moderate Risk Risky
Higher Risk
Existing Products New Products
Increased Risk