1.3 business objectives

vision statement

vision statement

a long-term goal, a dream or understanding of what the future should look like.

mission statement

states what the organisation does, right now, in order to achieve its vision.

objective

A stated outcome that a business aims to achieve; can be broadly stated in vision and mission statements, or more narrowly stated with measurable outcomes.

growth

The expansion of a business in terms of revenue, profit, number of employees, locations or another important metric.

profit

total revenue minus total costs.

strategy

refers to a plan that an organisation creates in order to reach a specific objective.

tactic

a smaller action that a business takes in order to reach its goals.

corporate social responsibility

Businesses actively seeking ways to improve society and the environment through core business activities and business designs.

difference between vision and mission statement

A mission statement defines the organization's business, its objectives, and how it will reach these objectives. A vision statement details where the organization aspires to go

planning begins with

the statement of purpose, such as ‘why’ which is expressed in the vision and mission statements.

mission and vision statements are important for:

both the path of the enterprise and the employees to feel personal purpose.

If a business does not live up to its vision and mission:

it can lose credibility in the eyes of customers and other stakeholders.

value

all the benefits that a business creates for the stakeholders involved.

how we perceive value is related to:

our individual and shared beliefs, assumptions and judgements.

examples for value created

owners: entrepreneurship, employees: developing, consumers: payment, suppliers: providing supplies.

examples for value received

owners: profits, employees: generous wages, consumers: goods, suppliers: generous payment

common interest of all stakeholders:

the business being financially viable (cover costs, profit, or surplus)

concrete objectives are set using:

s-specific, m-measurable, a-attainable, r-relevant, t-time focused criteria.

Objectives can be related to things such:

as growth of the business, profits, market share, customer satisfaction, ethics and sustainability.

historically acceptable for businesses to prioritize:

maximization of profits for shareholders or owners.

When a business grows, it can:

increase its revenue and reduce its unit (average) cost of production, resulting in increased profits.

excessive focus on growth and profit can also:

result in significant downsides for other stakeholders and for the natural environment.

Prioritising profits for shareholders can result in what economists call:

excessive value extraction

value extraction usually occurs when

shareholders or business managers are only considering short-term profit-making objectives, rather than the long-term health of the business.

creating shared value

proposed that businesses need to move beyond traditional CSR activities to recognise that the success of businesses and the health of their communities are interdependent.

generative (regenerative) business

aims to strengthen its social and environmental ecosystems by creating opportunities for other businesses and communities to develop, and by restoring the natural environment.

The social responsibilities of a business are related to:

the human needs in the ‘social foundation’ of the inner ring (water, food, networks, health, education)

biomimicry

The process of mimicking nature’s forms, processes and systems to solve human problems.

benefits of CSR

help businesses to improve their positive impact on society and the environment, loyal consumers, reduce future risks, motivated employees.

limitations of CSR

change culture of business, increase costs of production, reputational risk.

successful strategies can help a business:

respond effectively to changes in the external environment, making a business more agile and resilient.

strategic planning requires:

understanding of and connection to the vision and mission of the business, research into the market and products connected to the strategic focus, consideration of the influences and impact of plans on local and global scales and in the social and ecological domains

linear production

Taking resources from the Earth, making products with them and then disposing of the products.

circular production

A production model that reduces waste by ensuring outputs of the production system feed back into the system as inputs.

steeple

sociocultural (aware than ever of the ethics and sustainability responsibilities of businesses), technological (made it easier to develop new circular strategies), ethical (businesses need to have a higher purpose than profit maximisation), legal (laws requiring businesses to source sustainable materials, design durable products and provide consumers with the ability and right to have products repaired), political (technologies rely on raw materials that are concentrated in only a few geographic areas)

A tactic might involve actions such as:

changing pricing, revising a promotion or other actions that can be reversed if necessary and are unlikely to put a business on a long-term path.

circular supply models

enables businesses to reduce new material inputs, replacing them with recovered or bio-based materials.

resource recovery model

models that are focused on collecting, sorting and processing waste materials to be used as inputs in the production process.

three main activities involved in resource recovery models are:

collecting waste materials produced by households and businesses. sorting waste into different materials. secondary production where waste is transformed into finished raw materials.

product life extension models

focus on extending the time that a consumer uses products.

sharing models

allow consumers to share use of products with strangers, reducing the new inputs needed for products that might be under-utilised by the consumer.

product service system model

selling the service for using a product rather than selling the product itself.

limitations of circular business models

underdeveloped systems for waste recovery, increased use of bio-based materials, and negative unintended consequences.