corporate objectives by sayeedh ghouse

8/9/2019 Corporate Objectives by Sayeedh Ghouse

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Hi all. The first few lessons on corporate strategy and corporate social

responsibility for business studies unit 4 are given below. More notesand sample questions based on the pre seen case material will be

published in due course.

Regds..

Mr Sayeedh Ghouse

Lecturer

Inception Academy


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Corporate Objectives

Businesses must have a purpose or direction. Theyre unlikely tosurvive if either of the above are not met. To do so, th ey will haveto;

Decide upon the aims of the business Communicate their aims in a mission statement Set corporate ob ectives

!ims

!ims or ob ectives can be de"ned as the lon# term #oals orvisions of a business from which ob ectives can be set. Theyre#enerally ambi#uous and va#ue in nature $not clear%. &ore'ample, our aim is to become the best manufacturer of i(ods in!sia.

)ission Statement

These are the statements that outline the overall reasons for a"rms e'istence. ! mission statement is likely to include;

Purpose - The reasons why the company e'ists Values - *hat the company believes in. +# - (rotection to

the environment. Standards of behavior Standards set by mana#ers and

especially how employees are treated. Strategy )edium to lon# term plans desi#n to achieve

aims and ob ectives.

The mission statement must be capable of inspirin# those whohear it or see it. n other words, it should be memorable in nature.


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+'ample )ission statement of *alt Disney / 01ur aim is toprovide the "nest in entertainment to people of all a#eseverywhere.2

3owever, some or#ani4ations do not have a mission statement atall. &or e'ample, )arks 5 Spencer believes that their missionstatement cannot be summari4ed in a sin#le para#raph orsentence.

!dvanta#es a of mission statement

6. !ll stakeholders will know the central aim of the business.7. (rovides a sense of direction to the "rm.8. This will motivate employees who will work towards

achievin# this mission statement.9. 3elps mana#ers to plan, co / ordinate, control and or#ani4e

activities.

:imitations of a mission statement

6. )ost of them are va#ue and say little about them forbusiness. &or e'ample, they never mention the word 0pro"t2.

7. t is impossible to disa#ree with most of them.8. Theyre simply used for ( purposes to shoe the company in

a positive li#ht.

!n e


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by (eter Drucker, tried and tested by >ack *elch the C+1 of?eneral +lectrics for over 7@ years. !lso known as the bottoms /up approach%.

S (Speci c) / Sets out clearly what need to be achieved.+'ample - ncrease in sales

( easurable) / To assess success or failure.

+'ample - ncrease sales by 7A

! (!chievable) / nachievable ob ectives will be i#nored.

" ("ealistic) / !re the resources available

+'ample - !re the skills available

# (#i$e) / Settin# a deadline.

+'ample - *ithin 7 years.

1b ectives are usually set for

Survival ?rowth (ro"t

Durin# early sta#es Bi# is beautiful(:Cs for increased

*hen tradin# is diEcult +conomies of scaleshare prices and

Threat of takeover )arket dominanceshareholder value


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1ther ob ectives of a business include;

To operate in the interest of consumers. +'ample - (ublicSector.

evenue ma'imi4ation. +'ample - charity shops. To operate in a socially responsible manner.

1b ectives and conFicts amon#st stakeh olders

Shareholders

*hen dealin# with shareholders, there are 7 types of approaches;

6. Shareholder !pproach*here mana#ers #ive priority for shareholders; meanin#ma'imi4in# shareholder value.

7. Stakeholder !pproach This is involves treatin# all stakeholders e=ually. n theory,

this leads to lon# term bene"ts. )any mana#ers adopt thisapproach whereby they have a responsibility to allstakeholders.

The conFicts arise when mana#ers retain pro"ts for futuree'pansion purposes which thereby reduce shareholder value.

%$ployees

!lways want ma'imum wa#es and bene"ts alon# with ob security

and ob satisfaction. This reduces company pro"tability whichconFicts with mana#ers ob ectives of increased pro"ts.

Custo$ers

*ant value for money which can be done by investin# in 5D but,this may compromise on returns for shareholders.


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&overn$ent

*ants "rms to employ more people $to reduce unemployment%and ta' the pro"t made by "rms whereas pro"t is the mainob ective of any private sector "rm.

Pressure groups- *ill push the business to make mo re ethicaldecisions such as reducin# their carbon footprint but, this canprove costly.

Corporate Social "esponsibility (CS")CS is the responsibility a business has towards its stakeholders.CS is about;

Conductin# a business in an ethical manner.Balancin# the interests between di


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+ner#y eEciency

* #he local co$$unity*ill be concerned about;

>ob rotation Constitution 3ealth and safety

+ %$ployees*ill be concerned about;

3ealth and Safety +=uality *ork / life balance Security Trainin#

!dvanta#es of CS -

6% ! positive CS will enhance reputation of a "rm therebymakin# it easier to recruit and retain sta< more easily.

7% (ositive CS and its bene"ts can be reaped in the futurewhereby such "rms "nd it relatively easier to launch newproducts in markets they previously did not compete in. &ore'ample, >ohnsons 5 >ohnsons includin# milk powder formothers found it much easier to penetrate these markets as

they have #ained international acceptance and reco#nitionform the milk powder said to infants.

8% The implications of CS in the lime li#ht f ethical behaviorwill mean that the consumers of these products will be loyalto such "rms products since they feel a contribution is made


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by them towards the upliftment of society when makin# suchpurchases. !s a result, these "rms will be able to obtain acompetitive advanta#e a#ainst those "rms that resistportrayin# such an ima#e. This can be done by char#in# a

hi#her price.

9% 3i#her sales and pro"ts resultin# from CS activities will leadto #reater shareholder value and also make it easier for the"rm to raise "nance throu#h the issue of new shares ordebentures.

A% CS intercepts the possibility of a tarnished reputation as aresult of poor =uality or faulty products. &or e'ample, Toyota(rius and its faulty brakes.

H% ?overnment intervention may be minimi4ed to those "rmsen#a#ed in CS activities.

:imitations of CS -

6% CS activities are sometimes critici4ed to be short lived

durin# an economic crisis or periods of poor performancedue to its hi#h cost of implementation.

7% CS is #enerally critici4ed to be a source of public relationactivity as "rms want people to perceive a positive ima#ethrou#h the media.

8% The bene"ts of CS are #enerally #enerated over a lon#erperiod of time compared the date of commencement.

9% CS is considered to be a lon# term commitment andessentially re=uires a commitment from all levels within theor#ani4ation to succeed. !s a result, over investment maydistract the company from its core competencies.


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A% Sometimes CS is seen as an activity done by the "rms toprvent invention by the #overnment.

H% ! limitation of CS is that in a modern conte't, this policy

practiced by many "rms and therefore the costs ofimplementation may overwei#h the bene"ts.

Mr Sayeedh GhouseLecturerInception Academy

corporate objectives by sayeedh ghouse

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