BUSINESS ORGANIZATION

AND ENVIRONMENT
1.3 ORGANIZATIONAL OBJECTIVES
VISION • Vision means to have an image of an ideal situation in future.
STATEMENT • Outlines an organization’s aspirations in the distant future.
GUESS THE COMPANY

Bring inspiration and To accelerate the To be the best way to

innovation to every world’s transition to pay and be paid, for
athlete in the world. sustainable energy. everyone, everywhere.

To inspire and nurture

To organize the world’s the human spirit – one
To create a better information and make
everyday life for the person, one cup and
it universally accessible
many people. one neighborhood at a
and useful.
time.
 • Mission means to have a clear purpose.

MISSION • Mission statement is a simple declaration of the

underlying purpose of an organization’s existence and
STATEMENT its core values.
• Provides sense of direction and unifies all people
within organization.
 • To give people the power to share and make the world
more open and connected.
• To build the Web’s most convenient, secure, cost-
GUESS THE effective payment solution.
COMPANY
• To help people around the world plan and have the
perfect trip.
• Spread ideas.
DIFFERENCES BETWEEN VISION AND MISSION
STATEMENTS

Vision statement – what do we want to become?, mission statement – what is our business?

Vision statement – very long term, mission statement – medium or long term.

Mission statements are updated more frequently.

Vision statements do not have to be actual targets that must be achieved.

Mission statements are about what the business does 'each and every day' whereas vision statements
are about 'some day’.
LIMITATIONS OF MISSION AND VISION STATEMENTS

Statements are no more

than a public relations
Can be very time
stunt as the ultimate
consuming and difficult to
purpose of most
draft.
businesses is to maximise
profit.
 Short-to-medium-term the
goals or targets an organization
strives to achieve.

OBJECTIVES
More specific and measurable.

‘To achieve a 95% pass rate

with two years.”
AIMS AND OBJECTIVES ARE IMPORANT FOR THREE
FACTORS:

To measure and To motivate To direct

control
COMMON BUSINESS OBJECTIVES

Growth - increase in its sales Profit - provides an incentive Protecting shareholder

revenues or by its market for entrepreneurs to take value - generating long-term
share, essential for the risks in setting up and running value for shareholders
survival of a business. a business. (owners) of the business.
 • Ethics are the moral principles that guide decision-
making and strategy.
ETHICAL • Morals are concerned with what is considered to be
OBJECTIVES right or wrong from society’s point of view.
• Business ethics are the actions that are considered to
be morally correct employ by the organizations.
EXAMPLES OF
ETHICAL OBJECTIVES
• Reducing pollution by using
environmentally friendly production
• Disposal of waste in an
environmental manner
• Increased recycling
• Offering staff sufficient rest breaks
 Financial dishonesty

Environmental neglect
EXAMPLES OF
UNETHICAL Exploitation of the workforce
BEHAVIOUR
Exploitation of suppliers

Exploitation of consumers
CODE OF PRACTICE

• Documented beliefs and

philosophies of the business.
• People need to know what is
considered acceptable or not
acceptable within an organization,
guidelines and expectations on
employee behavior.
ETHICAL BEHAVIOUR

ADVANTAGES DISADVANTAGES
• Improved corporate image • Compliance costs
• Increased customer loyalty • Lower profits
• Cost cutting • Stakeholder conflict
• Improved staff morale and motivation • Ethics and CSR are subjective
STRATEGIES AND TACTIS

Strategies are the medium to long-term plans of action to

achieve the strategic objectives of an organization.

Tactics are short-term methods used to achieve an

organization's tactical objectives.
 • Short-term goals that affect a section of the
orgnization.
TACTICAL • Specific goals that guide the daily functioning of certain
OBJECTIVES departments.
TACTICAL OBJECTIVES

Survival Sales revenue maximization

LONGER-TERM GOALS OF STRATEGIC
A BUSINESS.
OBJECTIVES
STRATEGIC OBJECTIVES

PROFIT MARKET STANDING IMAGE AND

MAXIMIZATION REPUTATION
CORPORATE • Consideration of ethical and environmental practices
SOCIAL related to business activity.
RESPONSIBILITY • Socially responsible businesses are those that act
(CSR) morally towards their stakeholders.
THE EVOLVING ROLE AND NATURE OF CSR

What is considered “right” or “wrong” is largely based on

public opinion, which tends to change over time.

Companies are expected to donate part of their profits

to charity.

Customers are more careful about spending money on

products from socially irresponsible firms.

Investors are more wary of placing money with

unethical firms.
 • Corporate culture
• Type and size of organization
THE NEED FOR • Private versus public sector organizations
CHANGING • Age of the business
OBJECTIVES • Finance
INTERNAL FACTORS
• Risk profile
• Crisis management
 • State of the economy
THE NEED FOR
• Government constraints
CHANGING
OBJECTIVES • The presence and power of pressure groups
EXTERNAL FACTORS
• New technologies
SWOT ANALYSIS

• Decision-making tool.
• Can be used to assess the
current and future situation of a
product, brand, business,
proposal or decision.
 • Internal factors that are favourable compared with
STRENGTHS competitors.
• Helps the business to better achieve its objectives.
 • Unique selling point
• Brand awareness / loyalty
• Market share / market dominance

STRENGTHS • Corporate image and reputation

• Core competencies; product quality
• Geographical location
• Value for money
 • Internal factors that are unfavourable when compared
with rivals.
WEAKNESSES • Prevent or delay the business from achieving its goals.
 • Limited sources of finance
• High costs of production
• Liquidity problems

WEAKNESSES • Higher prices than competitors

• Demovatived workforce
• Lack of spare capacity
• Poor location
 • External possibilities for future development.
OPPORTUNITIES
 • Economic growth
• Weakening exchange rate
• Technological developments
• Market growth
`OPPORTUNITIES
• New markets and locations
• Government spending programmes
• Demographic and social lifestyle changes
 THREATS
EXTERNAL FACTORS THAT HINDER THE PROSPECTS FOR AN
ORGANIZATION.
 • New entrants in the market
• Economic downturn
• Inflation

THREATS • Pressure groups

• Social, environmental and legal constraints
• Unfavourable changes in seasons
• Outbreak of infectious diseases
SWOT ANALYSIS

ADVANTAGES DISADVANTAGES
• Simple and quick. • Does not demand detailed analysis.
• Wide range of applications. • Static model.
• Helps to determine organization’s position. • Should not be used in isolation.
• Helps to reduce risks of decision-making.
ANSOFF MATRIX

• Analytical tool that helps managers

to choose and devise various
product and market growth
strategies.
MARKET
PENETRATION
• Low-risk growth strategy.
• Selling existing products in existing
markets, i.e. increasing market share
of current products.
• Might be achieved by offering
competitive prices or loyalty
schemes.
 • Medium-risk growth strategy.
PRODUCT • Selling new products in existing markets.
DEVELOPMENT • Relies on product extension strategies and brand
development.
MARKET
DEVELOPMENT
• Medium-risk growth strategy.
• Selling existing products in new
markets, i.e. established product is
marketed to a new set of
customers.
DIVERSIFICATION

• High-risk growth strategy.

• Selling new products in new
markets.
• Helps to spread risks by having a
well-balanced product portfolio.
• Holding company and subsidiaries.
RELATED AND UNRELATED DIVERSIFICATION

Related diversification
Unrelated diversification
occurs when a business
refers to growth by
caters for new customers
selling completely new
within the broader
products in untapped
confines of the same
markets.
industry.
SUMMARY
REVIEW QUESTIONS

• How do mission and vision statements differ from one another?

• Why are aims and objectives important to business organizations?
• Differentiate between strategic objectives and tactical objectives.
• Why is there a need for organizations to change objectives?
• What is meant by ethical objectives and CSR?
• What are the advantages and disadvantages of ethical behaviour and CSR?