Management and organization

Week 2: Vision and mission statement

* Objectives come in many forms:
• Vision
• Mission statement
• Aim
• Corporate objectives
• Divisional objectives
• Departmental objectives
• Individual targets

- Mission statement: outline the overall purpose of the organization / a

statement of the business’s core aims, phrased in a way to motivate
employees and to stimulate interest by outside groups
- Vision statement: describes a picture of the ‘preferred future’ and
outlines how the future will look if the organization achieves its
mission / a statement of what the organization would like to achieve or
accomplish in the long term.

Vision Mission statement

- Describes a “preferred future”
- Outlines what the future will
look like when the mission is
achieved
- Provide an important service to
the world – instantly delivering
relevant information on virtually
any topic
- Outlines the overall purpose of
an organization
- To organize the world’s
information and make it
universally accessible and useful
 Example:
Organizations Vision Mission statement
Nokia Our vision is a world where Nokia exists to connect people with
everyone is connected each other and the information that is
important to them with easy-to-use and
innovative products. Nokia aims to
provide equipment, solutions and
services for consumers, network
operators and corporations.
Minnesota Keeping all residents To protect, maintain and improve the
Health healthy health of all residents
Department
(USA)
McDonald’s Where the world buys more McDonald’s aims to be the world’s
Restaurants McDonald’s than any other best quick service restaurant
fast food experience. Being the best means
providing outstanding quality, service,
cleanliness and value so that we make
every customer in every restaurant
smile.

While a company can communicate its vision to the world, some

have trouble to see its advantages.
Corporate objectives
- Corporate objectives are not specific enough for individual workers.
- The corporate aim needs to be broken down into specific tactical or
operational objectives.
This ensures:
• Coordination between all divisions
• Consistency with strategic corporate objectives
• The flow of adequate resources

- Corporate aims: the long-term goals which a business hopes to

achieve

- Divisional/operational objectives: short- or medium-term goals or

targets – usually specific in nature – which must be achieved for an
organization to attain its corporate aims
 M
a
xi
m
iz
e
sh
ar
e
h
ol
d
er
Increasev profits
al
of all divisions
by 10%ueper year

Within one region, to

increase market share by
10% and cut overheads by
5%

E.g. Marketing: increase profit margins by

7%
Finance: reduce long-term borrowing by
5%
R&D: develop an innovative product per
year

E.g. In marketing department: increase sales by average

5% per client & introduce 5 more clients to the business
each year
 A
i
m
Corpor
ate
Objecti
ves

Divisional
Objectives

Departmental
Objectives

Individual Targets
Example:

The relationship between aims and strategies

- Aims and strategies provide the basis and focus for business strategies

- Strategies provide the way (a plan of action) in which objectives are

achieved

- A poor plan or strategy will lead to failure to reach the target

 Corporate Objectives
Grow revenue by 15% per annum in each year
Marketing Objectives
Increase UK market share to 17%
Grow average customer spend by 5%
Marketing Strategies
Refocus product range on high margin items
Introduce CRM systems into industrial division

Marketing Tactics
Improve agreements with key suppliers
Conduct search engine advertising campaign

Strategy and tactics – the key differences

- Strategy: a long-term plan of action for the whole organization,

designed to achieve a particular goal

- Tactic: short-term policy or decision aimed at resolving a particular

problem or meeting a specific part of the overall strategy

Strategic decisions, e.g. to develop new Tactical decisions, e.g. to sell product in
markets abroad different-sized packaging
Long term Short to medium term

Difficult to reverse once made – departments Reversible, but there may still be costs involved
will have committed resources to it
Taken by directors and/or senior managers Taken by less senior managers and subordinates
with delegated authority
Cross-functional – will involve all major Impact of tactical decisions is often only on one
departments of the business department

Common aims and ethical objectives

Common aims are:

• Profit maximization: Profit maximization ( tối đa hóa) means producing
at the level of output where the greatest positive difference between total
revenue and total costs is achieved

• Profit satisficing (making enough profit): This means aiming to

achieve enough profit to keep the owners happy but not aiming to work flat
out to make as much profit as possible.
• Growth (in terms of sales or output): The growth of a business – in
terms of sales or value of output – has many potential benefits for the
managers and owners.

• Increasing market share: Increasing market share indicates that the

marketing mix of the business is proving to be more successful than that of
its competitors.
• Survival: This is likely to be the key objective of most new business start-
ups; The high failure rate of new businesses means that to survive for the
first two years of trading is an important aim for entrepreneurs.

• Maximizing short-term sales revenue: This could benefit managers and

staff when salaries and bonuses are dependent on sales revenue levels

• Maximizing shareholder value: increase the company share price and

dividends paid to shareholders; might be achieved by pursuing the goal of
profit maximisation.

Ethical Objectives
Ethical objectives are targets based on a moral code for the business
For example ‘doing the right thing’: This can be difficult.
Ethical objectives can stand in the way of profits.
Ex:

 Should a toy company advertise products to young children so that

they ‘pester’ their parents into buying them?
• Is it acceptable to take bribes in order to place an order with
another company?

Corporate Social Responsibility

- Objectives that focus on meeting social responsibilities are increasingly
important for most business organizations.

- The concept of Corporate Social Responsibility (CSR) focuses on the

inclusion of stakeholders in the aims and objectives of the company.

- A company isn’t only responsible to its shareholders, but also to the

society it operates in.
For example, companies that adopt CSR produce:
• Organic or vegetarian food
• From recycled materials
• Cosmetics which are not tested on animals
Factors determining corporate objectives

Why do objectives in companies differ?

• Corporate culture
The code of behaviour and attitudes in a company
• Size and legal form of the business
 Owners of small businesses may only be concerned with
satisficing profits, where directors of large firms are more focused on
profit maximizing or market share objectives
• Public sector or private sector

State owned organizations tend not to have profit as a major

objective.
• Well-established businesses

Newly formed businesses are likely to be focused on survival.\

SWOT analysis and strategic objectives

Strengths Weaknesses
Internal • A specialist marketing • Lack of marketing expertise
expertise
 • A new, innovative product or • Location of business
service
• Poor-quality product or
• Location of the business services

External • A developing market such as • A new competitor in your home

the internet market

• Moving into new market • Price wars between competitors

segments that offer improved
profits

* - A swot matrix helps managers set strategic objectives.

- A disadvantage of the SWOT Analysis is that it is subjective. Two

different managers can come to two different results

Gillette SWOT Analysis

 Strengths
• The market has limited innovation
but Gillette succeeds to introduce new
innovative products
• The competition in the market is
low
• Successful marketing strategy
(spokes persons)
• Strong brand name (logo)
• Offers complimentary products
Opportunities
• The personal care market is pretty wide
and Gillette has the chance to enter new
product segments
• Introduce more products for women
Weaknesses
• High prices
• Narrow segment focus
• The products do not have a significant
technological development
Threats
• The competition is low but Gillette
should consider the competitors and be
updated for their actions
• The financial crisis has a great impact on
the market