Unit 1.3 Business Objectives PDF

Unit 1.3 Business objectives Topic 1: Introduction to Business Management Unit content Assessment Content objective Vision statement and mission...

Unit 1.3 Business objectives Topic 1: Introduction to Business Management Unit content Assessment Content objective Vision statement and mission statement AO2 Common business objectives including: Growth Profit AO2 Protecting shareholder value Ethical objectives Strategic and tactical objectives AO3 Corporate social responsibility (CSR) AO3 Business Management Toolkit Circular business models Force field analysis (HL) Business objectives and the Business Management concepts Vision statement and mission statement  Hierarchy of objectives Objectives provide Vision businesses with a Mission targeted direction for the future. The nature of Strategies these objectives are: Tactics Vision This is an outline of an organization’s aspirations in the distant future. Vision statements focus on the very long-term. They are expressed as a broad view of where the company wants to be. Mission statements This is a simple declaration of: the underlying purpose of an organization’s existence. its core values. Mission statements focus on the medium to long-term. A well-written mission statement is clearly defined and realistically achievable. Vision or mission statement? Vision statements Mission statements Declaration of purpose (i.e. “What is our business?”). Aspirational (i.e. “What do we want to become?”). V Outlines the values of the business E (i.e. its beliefs and guiding principles R in business operations) Very long-term focus S Immediate time period Infrequently updated U Updated more frequently Does not specify actual targets to S More concrete and specific in targets achieve. it wants to achieve. About “each and every day” in the About “some day” in the future. present Over to you Hoang textbook Question 3.1 Vision and mission statements Page 41 Answer all parts Possible answers 3.1 (a) 3.1 (b) A mission statement declares the The mission statement provides underlying purpose of an the direction that is to be followed organisation’s existence and its core by the organization while the vision statement provides the values, focusing on the medium to goal (or the destination) to be long-term. It should be clearly reached by following the defined and realistically achievable. direction. It helps to properly align the resources of an organization towards achieving a successful future. For example,.. (refer to some of the statements given in the question). Common business objectives: Growth Profit Protecting shareholder value Ethical objectives Objectives and their importance to a firm Objectives are the goals or targets an organization strives to achieve. To measure To motivate They are generally specific and control and quantifiable and are set in line with the organization’s mission statement. Objectives are important for three reasons: To direct  The biggest risk is not taking any risk... In a Growth world that is changing really quickly, the only strategy that is This is usually measured by guaranteed to fail is not an increase in its sales taking risks. revenue or by market share. Mark Zuckerberg, Growth is essential for co-founder of survival in order to adapt to Facebook, the world’s ever-changing and largest social media competitive business platform 1 conditions. Failure to grow may result in declining competitiveness and threaten the firm’s sustainability.  There is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits. Profitability Milton Friedman, recipient of the Nobel Prize in Profit maximization is Economics in 1976 traditionally the main business objective of most private sector businesses. It provides an incentive for entrepreneurs to take risks in setting up and running a business.  If the customer is happy, the business is Protecting shareholder happy, and the value shareholders are This objective is about happy. earning a profitable return for shareholders in a Jack Ma, co-founder of sustainable way. Alibaba Group A challenge for the directors of a firm is to balance short-term profits (in the form of dividends) with an investment in the long-term value of the company. Ethical objectives Ethics are the moral* principles that guide decision-making and strategy. *Morals are concerned with what is considered to be right or wrong, from the point of view of society. Therefore, business ethics are the actions of people and organizations that are considered to be morally correct.  In 2003, Theranos, a blood testing Unethical business practises at Theranos company, claimed to have invented a medical machine that could detect diseases using only one drop of blood. In 2016, the firm was forced to shut down after an investigation showed the machine had technological flaws that produced widespread inaccurate results. In 2018, the CEO and COO were charged with massive fraud by government authorities. Advantages and disadvantages of ethical business practises Advantages Disadvantages Improved corporate image Compliance costs Increased customer loyalty Lower profits Cost-cutting Stakeholder conflict Improved staff morale and The subjective nature of motivation business ethics Billie Eilish remixed the classic shoe by choosing environmentally preferred materials. The Nike Grind midsole blends in with the colour of the upper, which itself is made with a synthetic nubuck material made from post-consumer recycled content for a super soft look and feel — all designed with sustainability in mind. Billie Eilish x Nike Air Force 1 Strategic and tactical objectives Strategies Strategies are plans of action to achieve the objectives of an organization. They are: medium to long-term goals. expressed specifically. Fulfilment of strategies will allow an organization to reach its objectives. Examples of strategic objectives Market standing: This refers to the extent to which a business has presence in the industry. Image and reputation: This stems from consumer beliefs and perceptions of a firm. Market share: Microsoft is an example of a firm that This is measured by expressing the has strong market presence, a firm’s sales revenue as a percentage reputation for high quality products of the industry’s total sales. and services and is the world’s leading provider of operating systems2. Tactics Tactics are the methods used to enact strategies of an organization. They are short-term and frequently generated in order to enact strategies. Fulfilment of tactics will allow an organization to perform its strategies. Examples of tactical objectives Survival Sales revenue maximisation Many firms had to change their tactical objectives in order to survive the COVID-19 pandemic. These strategies were short-lived due to the temporary closure of firms during the pandemic. Relationships between objectives The ideal situation of the business in the Vision distant future. The purpose and values from the Mission mission will shape employee behaviour to turn vision into reality. Strategic plans fulfil the Strategies purpose stated in the mission statement. Tactical actions add Tactics up to forming strategic approaches. Over to you Hoang textbook Question 3.2 Lenovo Page 46 Answer all parts  Answers: a) i. Strategy = an outline of the actions and decisions a company plans to take to reach its goals and objectives. A business strategy defines what the company needs to do to reach its goals, which can help guide the decision-making process, e.g., for hiring as well as resource allocation. ii. Market share = the portion of a market controlled by a particular company or product. It is represented by the percentage of total sales in an industry generated by that company/product. b) Reasons could include: Provides a focus for its staff Can be used to measure the performance of the business Informs strategic planning Any other valid point c) Barriers could include: Conflict, e.g., “accuracy and truth seeking” might limit Lenovo’s ability to earn high profits. Alternatively, shareholders might demand high dividends, but management seek to invest profits for the long term. Culture clash, e.g. compatibility of Chinese and American cultures. Financial constraints, e.g. sponsorship could harm cash outflow in the short term; any benefits are only reaped in the long run. Any other valid reason that is examined in sufficient detail. Theory of knowledge Some people argue that by targeting children, especially in an era of growing child obesity in many parts of the world, parents face unnecessary pressure to buy their children fast-food products. Do you consider McDonald’s marketing of its’ ‘Happy Meal’ as unethical? Justify your answer.  Possible discussion points: Arguments that agree it is unethical for Arguments that disagree that is unethical for McDonalds to market its Happy Meals: McDonalds to market its’ Happy Meals: Children can be influenced easily by marketing There is no obligation for parents to buy fast as their critical thinking skills are less food for their children. developed. Thus, using children as a means to Given the healthy options (such as dairy and pressure parents into purchasing fast food can fruit) that can be added/substituted in Happy be seen as manipulative and unethical. Meals, Happy Meals can provide nutritious The provision of unhealthy food in itself can be meals to children in appropriate portion sizes. seen as unethical to society at large, regardless Happy Meals now include more educational of the age of people consuming fast food. toys so it can be argued that these meals The toys provided in each Happy Meal further nourish body and mind. drive relentless consumerism for material goods that children lose interest in quickly, and therefore add to unnecessary waste/pollution when they are thrown away.  Collaborators:  Gigi Hadid  Bad Bunny  Billie Eilish  Travis Scott  Donald Glover (aka Childish Gambino)  Drake  Nike x Billie Eilish Adidas x Bad Bunny Travis Scott X Air Jordan Drake X Air Jordan Donald Glover x New Balance Reebok x Gigi Hadid Nike x Billie Eilish Reebok x Gigi Hadid Approaches to learning Hoang textbook Activity 3.4 Thinking skills Page 44 Activity 3.5 Research skills Page 45 Activity 3.6 Research skills Page 49 Corporate social responsibility (CSR) Corporate social responsibility Corporate social responsibility (CSR) is the conscientious consideration of ethical and environmental practice related to business activity. CSR policies and practices need regular review in order to adapt to evolving attitudes and expectations of different markets/countries. CSR practices can provide firms with competitive advantages and long-term sustainability. Examples of CSR policies Provide accurate product labelling Be conscious of impacts to the environment. Adhere to fair employment practises Contribute to communities via volunteer or charitable work Misleading food labels Recycling furniture at IKEA Wage theft at Funtea Community engagement by Nissan  The pros and cons of CSR policies With reference to the previous video case studies of CSR, answer the following questions: Video case study Questions 1. Misleading Explain one advantage and one disadvantage of labelling food with truthful food labels nutritional information for a food manufacturer. 2. Furniture recycling at Explain two advantages of the furniture recycling CSR initiative for IKEA. IKEA a) Suggest two CSR initiatives that can be adopted to improve the wellbeing of 3. Wage theft at employees at Funtea. Funtea b) For each suggestion from part a), explain one advantage and one disadvantage of the CSR initiative. 4. Community Explain one advantage and one disadvantage of engaging with the community as engagement by a CSR initiative for Nissan. Nissan  Answers 1. Possible answers include: Advantage: increased customer loyalty from health-conscious customers who are frustrated with misleading nutritional claims. Disadvantage: Increased compliance costs by redesigning food packaging to reflect truthful standards of nutritional labelling. 2. Possible advantages: Improved corporate image due to the favourable impression of IKEA making an effort to be environmentally sustainable. This is particularly relevant to IKEA due to market perceptions that they offer low prices due to use of cheaper quality raw materials. Increased customer loyalty as customer sentiments evolve to be more mindful of the sustainability of their purchases. 3. After full repayment of underpaid wages to all employees, Funtea can consider: communicating a transparent wage payment policy – Advantage: Improved staff morale and motivation that their employment rights are respected, and their concerns have been heard and addressed. Disadvantage: Lower profits as employees are remunerated fairly.  Establishing a workplace code of conduct – Advantage: Improved staff morale and motivation to address their concerns for safety, especially when raising concerns with management. Disadvantage: Compliance costs from time spent researching and writing a workplace code of conduct that is acceptable to all employees. 4. Possible answers include: Advantage: Improved corporate image, especially in the Nashville community where Nissan’s American headquarters are located. Disadvantage: Stakeholder conflict with shareholders over the extent to which financial resources of the firm are directed into the local community versus returning dividends to shareholders. Over to you Hoang textbook Question 3.3 CSR at McDonald’s and Burger King Page 48 Question 3.4 Walmart Page 49 Answer all parts Theory of knowledge Does the awareness and knowledge of ethics bring about an obligation for businesses to behave morally?  Internal impacts External impacts Corporate culture State of the economy Age of the business Government constraints Pressure groups (presence and Finance power) Risk profile New technologies Crisis management Type and size of organization Private vs. public sector firms Concepts in BM: There are various factors that cause objectives of a change and business to change, requiring creative responses to these factors to ensure the sustainability of the firm. creativity They include internal and external impacts. Over to you Hoang textbook Review Questions Page 52