BusinessStudiesOnline:Slide1

Setting Corporate Aims & Objectives

Setting Corporate Aims & Objectives
Thisinvolves
firmsdeveloping
mission
statements,
aims,objectives,
plansand
strategies.
Alloftheseare
linked,asshown:
Aim
Mission
CorporateObjectives
DivisionalObjectives
DepartmentalObjectives
IndividualTargets
BusinessStudiesOnline:Slide2
Corporate Aims
Corporate Aims
Corporateaimsexpressthelongtermintentionofan
organisationtodevelopinacertainway.
Theideabehindsettingaimsisthat:
everyoneinthebusinesshasaclearfocusofthedirectionthat
itisgoingin.
abusinesscanseehowmuchithasachievedafteragiven
time
Theyprovideaframeworkwithinwhichbusinessstrategies
canbedrawnup
BusinessStudiesOnline:Slide3
From Aim To Mission
From Aim To Mission
Havingsetlongtermaimsabusinesswillneedto
communicatethemtothestakeholders.
Thisisdonethroughamissionstatement
Missionstatementswilloutlinetheoverallreasonsforthe
firmsexistence
Exampleswouldbe:
toensureourproductsarewithinanarms
lengthofdesire
tobetheworld'sbestinternationalhomeimprovementretailer,
usingitsscaleanddiversitytodeliversustainablegrowthand
improvedreturnsforshareholders
BusinessStudiesOnline:Slide4
Are Mission Statements Worthwhile?
Are Mission Statements Worthwhile?
YES
Allstakeholderswillknowthe
centralaimofthebusiness
Motivatesemployees
Givesasenseofdirection
NO
Theyarevague,andsay
littleaboutthebusiness
SimplyaPRexercise
Impossibletodisagreewith
them
Missionstatementsaresomethingrelativelynew,
andsomebelievetheyareamanagementfad
Butaretheyworthhaving?
BusinessStudiesOnline:Slide5
Missions, Goals & Objectives
Missions, Goals & Objectives
Thesetermsareoftenconfused
Thedifferencesareasfollows:
Toincreasesalesby
10%peryear
QuantifiableStatement
ofthegoal
OBJECTIVE
Tobethemarketleader
inconfectionerysales
GeneralStatement GOAL
Tobethebestknown
nameinconfectionery
OverallPurpose MISSION
Example Definition Term
BusinessStudiesOnline:Slide6
Corporate Objectives
Corporate Objectives
Aimsandmissionstatementsarelongterm,and
thereforelackthedetailfordaytodaydecisions
Thisdetailwillbegiveninthefirmsobjectives,which
shouldsetmeasurabletargets
Manybusinessset2typesofobjectives:
Objectives
Strategic
Tactical
These are often
long-term, ie should
we enter a new market
These are often short-
term, ie what should
the specifications of a
new product be?
BusinessStudiesOnline:Slide7
Possible Objectives
Possible Objectives
Theobjectivesthatafirmadoptsmayinclude:
Profit
Maximisation
Profit
Maximisation
ToMaximise
Returns
ToMaximise
Returns
To
Diversify
To
Diversify
ToIncrease
MarketShare
ToIncrease
MarketShare
ToFocusOn
Strengths
ToFocusOn
Strengths
Growth
Growth
BusinessStudiesOnline:Slide8
What Determines Objectives?
What Determines Objectives?
CorporateCulture
Thisrelatestothemannerinwhichafirmisrun
Size&LegalFormoftheBusiness
Smallfirmswillhavedifferentobjectivestolargefirms
Privatesectorfirmswillhavedifferentobjectivestopublic
sectorones
AgeoftheBusiness
Newbusinessesarelikelytowanttosurvive
Olderfirmswillwanttomakeaprofit
BusinessStudiesOnline:Slide9
Conflicts In Objectives
Conflicts In Objectives
Differentstakeholderswillhavedifferentobjectives:
Theobjectivesofthemostimportantstakeholdersare
likelytobegivenfirstpriority
Suppliers
Creditors
Government
Society
Customers
Employees
Managers
Shareholders
POSSIBLEOBJECTIVE STAKEHOLDER
Highdividends
Promotion
HigherWages
LowPrices
MoreJobs
HighTaxRevenues
HealthyCashFlow
IncreasedSales
BusinessStudiesOnline:Slide10
Divisional, Departmental & Individual Objectives Divisional, Departmental & Individual Objectives
Onceafirmhassetitscorporateobjectives,theymay
breakthemdownintospecifictargetsfor:
Eachdivisionordepartment
Individualswithineachdepartment
ThisprocessiscalledManagementbyObjectives
(MBO)
BusinessStudiesOnline:Slide11
Establishing A Corporate Plan
Establishing A Corporate Plan
Havingestablishedtheirobjectivesabusinesswill
drawupaplanforthemediumlongterm.
Thiswillsetouthowtheyaregoingtoachievetheir
objectives.
Thisplanwilloutlinethestrategiesthatthefirmwill
adopt.
BusinessStudiesOnline:Slide12
Types of Plans
Types of Plans
Thereare4typesofplans
Operational
Wherethebusinesstriesto
increasetheefficiencyofthe
business
E.g.changequalitycontrolsystem
Generic
Usedtogainacompetitive
advantage
E.g.CentricasoldoffOneTelin
2005toconcentrateonitsenergy
business
Corporate
Aimedatlongtermposition
E.g.aimtodoubleinsizeoverthe
next10yearsthrough
mergers/acquisitions
Global
Businessesmaysetup
factoriesinother
countries
E.g.Dysonmovingproduction
toMalaysia
BusinessStudiesOnline:Slide13
Achieving Strategic Development
Achieving Strategic Development
InternalDevelopment
Wherethebusinessgrowsbyincreasingsalesandprofitover
time.Thisistheleastriskystrategy,butmaytaketime
Takeovers,Mergers&Acquisitions
Allowsquickgrowth,butcanpresentproblems,i.e.staffing,
diseconomiesofscale
CollaborativeStrategiesandAlliances
Whereabusinesswillworktogetherwithothercompaniesto
createjointventures.OftenreferredtoasSYNERGY
BusinessStudiesOnline:Slide14
Forming A Strategy
Forming A Strategy
MichaelPortersFiveForcesmodelisoftenusedtodo
this.Porterbelievedthatfirmsshouldconsider:
Threatof
Competition
Threatof
Competition
Threatof
Substitutes
Threatof
Substitutes
Degreeof
Rivalry
Degreeof
Rivalry
Suppliers
Power
Suppliers
Power
Buyers
Power
Buyers
Power
BusinessStudiesOnline:Slide15
Porter
Porter

s 5 Forces (1)
s 5 Forces (1)
Portermaderecommendationstodealwitheachtype
ofthreat:
1)Threatofnewcompetitors
ToovercomethisPortersuggests:
1)Intensivepromotion
2)Patentproductsandoperatingprocesses
2)ThePowerofBuyers
Portersuggeststhatbusinessescould:
1)Undertakeforwardverticalintegration
2)Makeitexpensiveforfirmstoswitchtoanothersupplier
BusinessStudiesOnline:Slide16
Porter
Porter

s 5 Forces (2)
s 5 Forces (2)
3)ThePowerofSuppliers
Portersuggests:
1)Backwardverticalintegration(buysupplier)
2)Refrainfromdevelopingcloserelationshipwithsuppliers
4)TheThreatofSubstituteProducts
Porterrecommends:
1)Buycompetitors,orpatentproductsfirst
2)Usespoilingtechniques
5)RivalryBetweenEstablishedCompetitors
Porterrecommends:
1)Developingdifferentiatedproducts
2)Restrictoutputintheindustry,ieformagreements