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? What do we do? For whom do we do it? What is the benefit?

MPHS Mission Statement We exist to inspire students with a passion for learning and a commitment to personal integrity and academic excellence. Students will be empowered to become self-confident, creative, socially responsible and 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 vague Used to make stakeholders “feel good” Can be similar to everyone else in the industry

The Hierarchy of 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 Corporate Objectives Divisional Objectives Departmental Objectives Individual Targets

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.

Specific Measurable Achievable Realistic or Relevant Time Specific SMART Effective objectives are SMART Specific Measurable Achievable Realistic or Relevant Time Specific

Common Aims for a Corporation Profit maximization Make 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 owner This may not make all stakeholders happy. Profit satisfying Make enough profit to keep the business owner happy

Common Aims for a Corporation Growth Rapid growth can lead to other problems Can cause loss of focus Increasing market share Retailers may be more likely to stock your brand Brand leader status Survival Maximizing short-term sales revenue Could result in less profit if sales price is reduced to achieve sales increase Maximizing shareholder value Increasing 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?

Corporate Social Responsibility (CSR) This concept applies to those businesses that consider the interests of society by taking responsibility for the impact of their decisions and activities on customers, employees, communities, and the environment. How have we seen CSR in the market place?

Measuring CSR with Audits Environmental Audit: pollution generation energy use recycling programs Social Audit: health and safety records contributions to community & charities conducting business with ethical sources employee benefit schemes Not included: Financial concerns

Factors Influencing Objectives Conflicts between objectives Growth vs profit; short-term vs long-term; stakeholder conflicts Corporate culture Size and type of business Large, small, sole proprietorship, corporation Public or Private sector New business or well-established

CSR – Corporate Social Responsibility Why corporations respond: Increasing publicity from pressure groups UN Millennium Development Goals (120 countries agreed to “environmentally sustainable growth” Global concern over climate change Legal 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 grow Senior management may quit causing a refocus in other areas while a replacement is found External environment may change – their may be a recession Short-term objectives may be replaced with long-term objectives Laws 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 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 Strengths W Weaknesses O Opportunities T Threats

Strengths Internal factors that are advantages Experienced management Product patents Loyal workforce Extensive product range

Weaknesses Internal factors that are seen as negative Poorly trained workforce Limited production capacity Aging equipment

Opportunities External factors from market to competitors New technologies Export markets expanding faster than domestic markets Lower interest rates Increased consumer demand

Threats External factors focused on business and economic environment New competitors in the marketplace Globalization driving prices down Changes in law regarding product Changes in government policy

SWOT Internal Strengths Weaknesses Opportunities Threats External

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

Sell more of what you already sell to the same people. 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.

Ford passing Honda with an eye towards catching Toyota in total market share. Market Penetration Lowest Risk

Market development Ansoff's Matrix 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 Market Development Moderate Risk

Product development Ansoff's Matrix 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.

Developing new products for a market you already serve. Coke created new products: Coke Zero Coke with Lime Cherry Coke Caffeine Free Coke Product Development Higher Risk

Sell different things to different markets. Ansoff's Matrix Diversification Selling different, unrelated products in new markets. Sell different things to different markets. This is the MOST risky.

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. Diversification Risky

Ansoff’s Matrix A model used to show risk with the four growth strategies Existing Products New Products Market Penetration Sell more in existing markets Product Development Sell new products in existing markets Lowest Risk Higher Risk Market Development Sell existing products in new markets Diversification Sell new products in new markets Moderate Risk Risky 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 Matrix SWOT STEEPLE

Ansoff’s Matrix A model used to show risk with the four growth strategies Existing Products New Products Market Penetration Sell more in existing markets Product Development Sell new products in existing markets Lowest Risk Higher Risk Market Development Sell existing products in new markets Diversification Sell new products in new markets Moderate Risk Risky Increased Risk