1.3 Business Objectives

The basics of Business Objectives

Vision statement

The vision statement describes the long-term objective of your company, usually for a time frame of five to ten years or even longer. The WHAT do we want.

Mission statement

A mission statement is like a roadmap of how to achieve the goals set in your vision statement. It defines the purpose of the organization. The WHY are we doing what we are doing.

Why have a vision/mission statement?

• Critical for everyday direction for your business 

• Helps to focus employees to understand where we are going  

• Mission statements can evolve over time. However, changes needs to be done after serious consideration 

• It is also important for external stakeholders - reputation of the business 

• Not all businesses have a vision and mission statement - sometimes they have a “purpose” statement instead

Audience for mission statement

Internal stakeholders: provides a mean for accountability by defining key performance indicators.

External stakeholders: Measures how successful the business is at achieving the VS through MS.

Audience for vision statement

Internal stakeholders: It inspires and motivates employees.

External stakeholders: It helps bind through common beliefs.

Define an Aim

Long-term goals that a business wants to achieve in the future.

What are Objectives?

Targets set by organisations to achieve its corporate aims.

Define Strategies

Long-term plans that set out ways on how a business will achieve its corporate aims.

What are Tactics?

Specific techniques used by a business to achieve its objectives.

What are Strategic Decisions?

• Long-term

• Difficult to reverse once done

• Expensive

• Taken by directors/Senior managers

• Cross functional-apply to most departments

What are Tactical decisions?

• Short or medium term

• Reversible, but some costs might follow

• Taken by less senior managers

• Tactical ones affect specific departments only

What are Ethical objectives?

Objectives influenced by moral values. These values often come from different stakeholders in the organization and reflect their ethical position on moral values.

Advantages of EO? (long term)

• Better reputation

• More businesses are attracted

• More likely to be awarded government contracts

• More well-qualified staff will get attracted

• Avoiding potential expensive court cases - reducing fines

Disadvantages of EO? (short term)

• Would need to invest more money

• Not taking bribes to secure contracts can mean losing significant sales

• This could lead to lower profits because of accepting that we should not match prices with competitors

• Reduction in pester power

• Paying fair wages results in a lack of motivation and competitiveness inside the company against other companies.

What is CSR?

Corporate Social Responsibility are internal and external interests that a business need to consider and take responsibility for. They are divided into three categories.

What are the three categories for CSR?

• Economic: Profit and Dividence

• Environmental: Climate, Resources and Transport

• Social: Employees, Community and Disaster relief

Why is it important to include CSR into businesses?

• Global concerns over climate change with the increased pressure on companies from international interest groups

• Legal changes: Wages, responsibility for production, transportation, etc. as part of the increased pressure on transparency

• Focus on moving from shareholders to stakeholders

• Moving away from the terminology CSR and replacing it with Sustainability or ESG

What are Social audits?

A way to report on how well a company´s social performance(ethical behaviours) matches its ethical objectives. It usually includes annual targets and covers topics that impact society.

What topics do Social audits cover?

• Health and safety records

• Contributions to local community

• Ethical sourcing for production

• Employee benefit schemes

• Customer and supplier feedback

Social audits: Benefits

• Identifies the social responsibilities the business is meeting(and what still needs to be achieved)

• Sets targets for improvement in social performances by comparing audits with the best-performing firms in the industry

• Gives direction to the action plan. A business still needs to put into effort to achieve its social/ethical objectives

• Improves a company´s public image and this can be used as a marketing tool to increase sales

Social audits: Limitations

• They are not legally required so one can avoid making them or faking them

• It is not checked so some activities are done without any real value and are called greenwashing

• Many consumers don´t care about a company´s social responsibilities and are just there for the products. Is it worth it then?

• A lot of time and money needs to be devoted to making a social audit

• It is not proof that a company is being socially responsible

What is SWOT

• Internal: Strengths/Weaknesses

• External: Opportunities/Threats