BUSINESS AND MANAGEMENTMODULE 1

BUSINESS ORGANIZATIONS & ENVIRONMENT

ORGANIZATIONAL OBJECTIVESIf you dont know where you are going, youll end up someplace else.

Yogi Berra, former MLB player

IntroductionThe annual report for Cadbury Schweppes for 1998 stated that there were 8,374 employees. As they arrive to work each day, the employees know their jobs and how to do it. This is because each of the employee has a clearly defined job description which has been carefully written to ensure that the job is done in an appropriate manner.

This situation has not been achieved by accident; on the contrary, careful attention has been given to the needs of the business in order for it to operate successfully. Each department will have certain requirements to fulfill which will have been generated from the company objectives which clearly state what the business is hoping to achieve both in the short and long term.

If Cadburys did not have any objectives, there would be nothing for the company to work towards. The objectives determine the role of the employees within the business.

ContextOn occasions when the business is faced with a difficult decision, reference to its objectives will help in the decision making process.Objectives provide a sense of direction for the business and its employees; the objectives can be assessed by reference to targets which in turn can be measured.

The Nature of ObjectivesObjectives are the goals of the business. They represent the outcomes or targets that the business wants to gain in order to achieve its aims. The objectives of a business are derived from its aims.Well defined objectives are important. They will help the business to be clear about what it wants to achieve. The performance of a business could be assessed by how effectively it achieves its objectives.

Characteristics of SMART Business ObjectivesSpecificstating exactly what it is trying to achieve.Measurableable to be measured to decide if they have been achieved.Agreedhave the approval and understanding of everyone involved.Realisticable to be achieved by the business taking into account its resources, competition, market, etc.Time Specific state a time by which they should be achieved.

Formative Case Study - LenovoThis Chinese multinational technology firm, bought out the personal computers division of IBM in 2005. The aim was to establish itself outside of the Asian market by owning IBMs globally recognized brands such as ThinkPad laptops. The company is committed to four key values:customer serviceinnovative and entrepreneurial spiritaccuracy and truth-seekingtrustworthiness and integrityRecently, Lenovo has also tried to increase its market dominance by sponsoring key sporting events. Examples include its sponsorship deals with Williams Formula One (Grand Prix) racing team and the National basketball Association signed in 2007, and being a key corporate sponsorship of the Beijing Olympic games.

Explain why it is important for Lenovo to specify its organizational objectives.Examine the reasons why Lenovo might not be able to meet its objectives.

Factors Which Determine the Corporate Objectives of a Business

The size and status of the business.The power of stakeholders.Ownership.Long and short-term objectives.External and internal pressures.RisksCorporate and business culture.Number of years the business has been operating.

AIMSMISSIONCORPORATE OBJECTIVESDIVISIONAL OBJECTIVESDEPARTMENTAL OBJECTIVESThe business over all purpose. The long-term goals which a business hopes to achieve. No two companies will have the same corporate aims.A statement of the businesss core aims, phrased in a way to motivate employees and to stimulate interest by outside groups. Its an attempt to condense the purpose of the businesss existence into one statement.INDIVIDUAL TARGETSThese are the goals of the business. They are the outcomes or targets the business want to gain in order to achieve its aims. The objective of a business can be derived from its aimsSpecific targets for separate divisions.Targets for each departmentIndividual goals/targetsManagement By Objectives (MBO)

THE HIERARCHY OF OBJECTIVES

INDIVIDUAL TARGETSTO MAXIMISE SHAREHOLDERS VALUETO INCREASE PROFITS OFF ALL DIVISIONS BY 10% PER YEARWITHIN ONE REGION, TO INCREASE MARKET SHARE BY 10% AND CUT OVERHEADS BY 5%MARKETING: Increase Profits by 10%; FINANCE : Reduce Long-term borrowing by 5%; R&D: Develop one innovative product each year.E.G IN THE MARKETING DEPARTMENTIncrease Sales by an average of 5% per client.Introduce five more clients to the business each year.AIMS CORPORATE OBJECTIVESDIVISIONAL OBJECTIVESDEPARTMENTAL OBJECTIVESManagement By Objectives (MBO)

THE HIERARCHY OF OBJECTIVES

Other Types of ObjectivesShort term vs Long termTactical (Operational)StrategicEthicalCSR

Tactical (Operational)Short term objectives that are mainly departmentalizedMore sales; lower costs etcSurvival especially in tough economic timesFor example, a company may have a corporate objective of becoming a global operator in ten years, getting established in Europe within one year may be a tactical objective

Strategic ObjectivesLong term plans that usually affect the entire businessGrowthImage and reputationMarket shareIn reality, businesses may have several strategic objectives taking place during the same time

Examples: Strategic Objectives

A bigger market share. Quicker design-to-market times than rivals. Higher product quality than rivals. Better customer service than rivals Recognition as a leader in technology

Ethical ObjectivesEthics are the moral principles that guide decision-making and strategyAn ethical business is likely to treat its workers, customers, shareholders and the environment in a responsible manner

Exercise - Walmart

Exercise Peter DruckerComplete the Peter Drucker assignment found on the S drive

Strategic Questions Involving Ethical ObjectivesIs it ethical to reduce costs by exploiting cheaper labour in less economically developed countries?Is it ethical to sell products that are legal, but known to harm those who use them?Is it ethical to target children in advertising?Is it ethical to manufacture products that are used to kill?

These are big questions that elicit strong views

Class DiscussionYou are the CEO of a company which produces a special line of mens clothing and you are seeking a bigger market share for your products. Using the SMART acronym, establish your Corporate, Strategic, Ethical and Operational objectives.What possible corporate objective your business can have with regard to the following groups of stakeholders?Customers; Suppliers; Employees

Formative Case StudyCase: McDonalds vs Burger KingSource: Business & Management, Paul Houng, Unit 1.3, Pg 51

DECA ConnectionYou are to assume the role of a plant employee, whos company is experiencing a serious problem with productivity.Much of the problem can be traced to employees with young children.When their care-giver arrangements dont work out