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