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BUSINESS AND

MANAGEMENT
MODULE 1
MODULE 1

BUSINESS
ORGANIZATIONS &
ENVIRONMENT

ORGANIZATIONAL
OBJECTIVES
If you dont know where
you are going, youll end
up someplace else.
Yogi Berra, former MLB player

Introduction

The 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.

Context
On 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 Objectives


Objectives 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 Objectives

Specific

stating exactly what it is trying to achieve.

Measurable
able to be measured to decide if they have been
achieved.

Agreed
have the approval and understanding of everyone
involved.

Realistic

able 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 - Lenovo

This 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 service
innovative and entrepreneurial spirit
accuracy and truth-seeking
trustworthiness and integrity

Recently, 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.
Risks
Corporate and business culture.
Number of years the business has been
operating.

THE HIERARCHY OF OBJECTIVES

Management By Objectives
(MBO)

AIMS

MISSION

CORPORATE OBJECTIVES

The 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.
These 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 aims

Specific targets for separate


divisions.

DIVISIONAL OBJECTIVES
DEPARTMENTAL OBJECTIVES

INDIVIDUAL TARGETS

Targets for each


department

Individual
goals/targets

THE HIERARCHY OF OBJECTIVES

TO MAXIMISE SHAREHOLDERS VALUE

Management By Objectives
(MBO)

AIMS

CORPORATE OBJECTIVES

DIVISIONAL OBJECTIVES

DEPARTMENTAL OBJECTIVES

TO INCREASE PROFITS OFF ALL DIVISIONS BY


10% PER YEAR

WITHIN ONE REGION, TO INCREASE


MARKET SHARE BY 10% AND CUT
OVERHEADS BY 5%

MARKETING: Increase Profits by


10%; FINANCE : Reduce Longterm borrowing by 5%; R&D:
Develop one innovative product
each year.

E.G IN THE MARKETING


DEPARTMENT

INDIVIDUAL TARGETS

Increase Sales by an average of


5% per client.
Introduce five more clients to
the business each year.

Other Types of Objectives


Short

term vs Long term


Tactical (Operational)
Strategic
Ethical
CSR

Tactical (Operational)
Short

term objectives that are


mainly departmentalized
More sales; lower costs etc

Survival

especially in tough
economic times
For 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 Objectives
Long

term plans that usually affect


the entire business
Growth
Image and reputation
Market share

In

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 Objectives
Ethics

are the moral principles that


guide decision-making and strategy
An ethical business is likely to treat
its workers, customers, shareholders
and the environment in a responsible
manner
Exercise - Walmart

Exercise Peter Drucker


Complete

the Peter Drucker


assignment found on the S drive

Strategic Questions Involving Ethical


Objectives
Is 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 Discussion
You 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 Study


Case: McDonalds vs Burger King
Source: Business & Management, Paul
Houng, Unit 1.3, Pg 51

DECA Connection

You 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

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