Business Objectives
Chapter 4
Chapter Objectives
• The nature and significance of business objectives in the private and public sectors
• Decision-making and influences on business objectives
Business Objectives
4.1
Business Objectives
• An objective is a target
• A good objective will state:
• what is to be achieved (e.g. an increase in profit)
• how much the business wants it to be (e.g. $25 000)
• when it wants this done by (e.g. three years)
Business Objectives
• This means a good objective should be:
• specific in terms of what the target is
• quantifiable (measurable)
• time specific in terms of when it should be completed
Business Objectives
• A business will have an overall objective
• Such as doubling profits within 5 years
• Managers will then set departmental targets
• Such as the marketing department increasing sales by 40% over an agreed period
• The operations management department reducing costs by 20% of the next three years
• The human resources department increasing labor productivity by 8% over the same time
period
• Each individual should also have their own objective
Business Objectives
• Corporate objectives
• Apply to the entire business
• Examples include:
• Growth
• Expansion
• Overall sales objectives
Case study: Tesco’s growth objective takes it to
Turkey
1. Explain how the Tesco employees responsible for its marketing might help the
company to achieve its objective of growth in Turkey.
2. Discuss the extent to which Tesco benefits from its clearly stated business
objectives.
Corporate Social Responsibility as a Business
Objective
• A business may have many objectives relating to different areas
• Example, it may want to boost profits but at the same time be aware of the impact on society
and the environment
• All countries have different laws on how a business should conduct itself within their
borders
• Minimum wage
• Age
• Environmental protections
Corporate Social Responsibility
• Accepting obligations to society over and above the legal minimum
• What do you think this means?
Corporate Social Responsibility
• For example, a business may:
• believe it should ensure that work is interesting and that employees have a good career path
within the organization
• believe it has a responsibility to keep people in work as much as possible and therefore be
reluctant to force anyone to leave the business
• believe that it is important to pay suppliers quickly rather than taking as long as possible
and holding on to the money
• believe that it should invest in its local community to improve the area and quality of life of
the community where it is based.
Examples of Corporate Social Responsibility
• Environment:
• Businesses, both large and small, have a large carbon footprint
• Philanthropy:
• Donating to national and local charities
• Whether it involves giving money or time, businesses have a lot of resources that can benefit charities
and local community programs
• Ethical labor practices:
• Treating employees fairly and ethically
• Especially true of businesses that operate in international locations with labor laws that differ from
country to country
Growing Importance of CSR
• Areas of CSR include:
• environmental concerns
• poverty
• human rights
• animal rights
• Businesses are realizing the importance of CSR in attracting and maintaining
employees and customers
• Stakeholders are demanding that businesses give back to the larger community in
which they operate
Toms
• “One for one” motto is a well known phrase
• They’ve recently upped the ante by donating a portion of their sunglass sales to vision care for
children in need
• Toms’ employees participate in an annual Shoe Drop where they travel and donate a variety of
goods to children
• Their careers page specifically calls for employees that want to change lives and be a part of a
movement
LinkedIn
• One Friday each month LinkedIn’s employees participate “InDay.”
• InDay’s purpose is to give back to the community through employee volunteerism and
resources.
• Each InDay has a different theme allowing diverse departments to come together for a common
cause.
• InDay activities range from guest speakers discussing global justice, to initiating global
learning programs, and volunteering in local communities
PG&E
• PG&E does its part to serve the communities of California
• On Earth Day employees help clean and restore 18 state parks
• They are exemplary members of Habitat for Humanity and volunteer by providing solar panels
on new Habitat homes
• Participate in various food programs
Zappos
• Zappos is known for a company culture that focuses on the well being of their employees and
they are on a mission to make the world a better place
• They donate huge amounts of Zappos goods to tons of charitable organizations
• Their employees are paid for time off if they are volunteering
Now It’s Your Turn
• In pairs, find another example of a company that utilizes CSR.
• Give a short presentation to the class
Case Study: Intel Sets Itself Social Objectives in
Malaysia
1. Using examples, explain the difference between mission and objectives.
2. Evaluate the extent to which Intel benefits from having a widely publicized
mission statement.
Mission Statement, Objectives, Strategy and
Tactics
• The mission of a business is the fundamental reason why it exists
• A mission statement sets out the purpose of the business
• The mission is a rather general statement and, unlike objectives,
whether or not it has been achieved cannot easily be measured.
Mission Statement, Objectives, Strategy and
Tactics
• Once these targets have been set the business has to decide how to achieve
them most effectively
• The long-term plan to achieve an objective is known as a strategy.
• The strategy has to be put into action.
• The shorter-term action plans that combine to make up the strategy are
known as tactics.
From Mission to Tactics
• A mission statement sets out the overall purpose of a business.
• An objective is a target that is measurable and has a given timescale.
• Strategy is a long-term plan to achieve the objective of the business.
• Tactics are short-term actions needed to implement the strategy.
Mission Statement
• A mission sets out the purpose of the business
• Example: An airline company may exist to be the “best airline in the world”
• Mission is determined by the owners of the business
Objectives
• Objectives are measurable targets that are given a timescale
Strategy
• Long-term plan to reach an objective
The Importance of Business Objectives
• Business objectives set out what the business wants to achieve
• This provides a focus for all decisions
• Everyone in the business should know what their role is to lead the company to
achieve those objectives
• Objectives can:
• motivate employees by providing a target
• provide a measure of control as progress can be reviewed against the target
The Role of Objectives in the Stages of Business
Decision-Making
4.2
The Role of Objectives in the Stages of Business Decision-
Making
• Managing a business involves many different decisions
• Making right decisions is important
Decision Making Involves
• Setting objectives: A success of a plan can only be judged against the objectives that
were set.
• Gathering information: You need information on where you are at the moment, what
is happening and your opinion to analyze the situation.
• Selecting a suitable strategy: Figuring out the best strategy
• Implementing the strategy: Put your tactics to work
• Reviewing: Essential to see how you have got on and what if anything needs to
change. Can also change targets at this point.
How Objectives Might Change Over Time
• Internally: A business may have new owners or managers who want to achieve
different things
• Example: more concerned about environmental record, faster growth, etc.
• Externally: Perhaps the economy has changed so the business needs to change their
targets
• If the economy is in decline, growth targets will be reduced
• New competitors would affect profit targets
• Decision-making is a continuous process that changes as new objectives are set
Turning Objectives Into Targets and Budgets
• With each objective there should be a strategy of how it is to be achieved and specific
tactical targets showing the details of the activities that need to be undertaken
• A plan will show:
• Who is in charge of what
• What they have to do
• When it must be done
• How much do they have to spend (a budget)
• A budget is a financial plan
The Communication of Objectives
• There needs to be a discussion with people who will be responsible for achieving the
objectives
• Having objectives can be motivating for employees because it provides a sense of
direction
• Also could be demotivating if the objectives are unrealistic and if there is no one that
believes in them
How Ethics May Influence Business Objectives
• Ethical behavior is behavior that is thought to be morally correct, and not necessarily
the most profitable
• How businesses consider right or wrong in terms of business behavior
• Should we produce a product that is harmful to the environment even though it is
much cheaper for us?
• Example: plastic bags. Many businesses have stopped using plastic bags and make you
purchase reusable bags
• Sometimes objectives can encourage unethical behavior:
• If the objectives are set too high
• Sales objectives for example, might encourage the sales team to trick customers or pressure
them into buying something they don’t want or need
Encouraging Ethical Behavior
• Beyond written codes of ethics, organizations have unique cultures—ways of doing
things that evolve through shared values and beliefs
• Subordinates look to their supervisors as role models of ethical behavior
Ethical Issues: Bribes
• Bribery is the act of giving money, goods, or other forms of compensation to a
recipient in exchange for an alteration of their behavior
• A kickback is a form of negotiated bribery in which a commission is paid to the bribe-
taker in exchange for services rendered
Ethical Issues: Conflict of Interest
• An ethical challenge that occurs when an individual or organization is involved in
multiple interests that are at odds with one another
• Self-dealing: Officials enter into a deal benefiting them personally
• Outside employment: The interests of one job may contradict another
• Family interests: Officials employ or purchase goods from a relative. Abuse of this type is
called nepotism
• Gifts from friends who also do business with the person receiving the gifts
Case Study: Ethics at Texas Instruments (TI)
1. Explain why TI sets out its ethical objectives on its website.
2. Discuss the case for and against TI operating with ethical behavior as a key
objective at all levels in the business.
Practice Question
You are on a committee interviewing applicants for a position. A friend has applied.
What should you do?
1. Inform the head of the hiring committee that you know one of the applicants and
ask whether you should remove yourself from considering her application
2. Look at your employee code of conduct
3. Advocate for your friend. You would enjoy working together