1.3 ORGANIZATIONAL OBJECTIVES

1.3 ORGANIZATIONAL OBJECTIVES

1. Usually, the owners of businesses have an idea of what they are trying to achieve.

   • In partnerships, it is important for partners to agree on the direction their business should take to avoid future disagreements.
   • Limited companies must state the overall objectives of the business in their Memorandum and Articles of Association, but this often lacks much strategic detail.
   • Missions statements outline the overall purpose of the organization
     • "Who we are and what we do"
   • A vision statement, describes a picture of the `preferred future´and outlines how the future will look if the organization achieves its mission.
     • It´s a clear statement of the future position that offers the ideal of what owners and directors want their business organization to become.

2. Aims, objectives, strategies and tactics

   • Corporate aims: long term goals which a business hopes to achieve.
     • DIVISIONAL/OPERATIONAL OBJ: which effective management is based. (SHOWN BY "AIM")
   • AIM MISSION CORPORATE OBJECTIVES DIVISIONAL OBJECTIVES DEPARTMENTAL OBJECTIVES INDIVIDUAL TARGETS
     • AIM: to maximize shareholder value.
     • CORP. OBJ: To increase profits of all divisions by 10% per year.
     • DIV. OBJ : To increase market share by 10% and cut overheads by 5%.
     • DEP. OBJ: MARKETING: increase profit margins by 7%. Finance: reduce long-term borrowing by 5%. R&D: develop one innovative product each year.
     • IND. TAR.: MARKETING DEP: increase sales by an average of 5% per client.
   • OPERATIONAL OBJECTIVES "SMART":
     • Specific: obj. should focus on what the business does and should apply directly to that business.
     • Measurable: obj. that have a quantitive value are likely to prove to be more effective targets for directors and staff to work towards.
     • Achievable: obj. MUST be achievable.
     • Realistic and relevant: obj. realistic when compared with the resources of the company.
     • Time-specific: a time limit should be set when an objective is established.

3. INTERLINKING AIMS, OBJECTIVES, AND STRATEGIES.

4. RELATIONSHIP BETWEEN AIMS, OBJ., STRATEGY AND TACTICS

   • CORPORATE OBJ.
   • MARKETING OBJ.
   • MARKETING STRATEGIES
   • MARKETING TACTICS
   • CLEAR OBJECTIVES
   • STRATEGIC DECISIONS: -Long term, -difficult to reverse once made, -taken by directors, - cross-functional
   • TACTICAL DECISIONS: -Short to medium term, -reversible (may still be costs), -taken by less senior managers, -Impact is often only one department.

5. COMMON CORPORATE AIMS

   • Profit maximization: producing at the level of output where the greatest positive difference between total revenue and total costs is achieved.
   • PROFIT SATISFICING: aiming to achieve enough profit to keep the owners happy, but not aiming to work flat out to make as much profit as possible.
   • GROWTH: the growth of a business in terms of sales or values of output.
   • INCREASING MARKET SHARE: closely linked to overall growth of a business is the market share it enjoys within its main market.
   • SURVIVAL: once the business has become firmly established, then the other longer-term obj. can be established.
   • MAXIMIZING SHORT-TERM SALES REVENUE
   • MAXIMIZING SHAREHOLDER VALUE

6. ETHICAL OBJ.: targets based on moral code for business.

   • ETHICAL CODE: a document detailing a company´s rules and guidelines on staff behavior that must be followed by all employees.

7. CORPORATE SOCIAL RESPONSIBILITY: those businesses that consider interests of society by taking responsibility for the impact of their decisions and acts.

   • STAKEHOLDERS: people or groups who can be affected by, and therefore have an interest in, any action by an org.

8. FACTORS DETERMINING CORP. OBJ.

   • CORP. CULTURE
   • SIZE AND LEGAL FORM OF THE BUSINESS
   • PUBLIC OR PRIVATE SECTOR BUSINESSES
   • WELL-ESTABLISHED BUSINESSES

9. CHANGING BUSINESS OBJ.

   • SWOT ANALYSIS: a form of strategic analysis that identifies the main internal and external strengths and weaknesses.
     • STRENGTHS
     • WEAKNESSES
     • OPPORTUNITIES
     • THREATS