Subject: Management of Business
Unit 1
Form: 6B
1
BUSINESS
OBJECTIVES
Specific objectives:
1. Differentiate between
aims and objectives
2. Explain the nature, role and
importance of objectives
3. Discuss the characteristics of a
well- written objective
4. Differentiate between the types of
objectives
5. Outline the hierarchy of objectives
5. Discuss the
Scenario
David Beckham has retired and wants
to keep himself busy, so he has decided
to set
up a business selling replica sports shirts.
? He decides to hire a small stall in Camden market, and
has decided to work 7 days a week.
? With every purchase- David said that he will sign the
shirt to help boost early sales
? In the future David wants to replace
his
stall with his own shop
?
Miss Burr’s Sprite Spree!
It cost me 10p to buy these
from CostCo!
? What would be my FIRST aim
when selling these on?
?
Miss Burr’s Sprite Spree!
?
?
One year on…..
What would I hope to be
able to do when selling my
cans of Sprite after a year?
Typical Business Aims
Survival- Making sure the business is able to
trade next year
? Make a profit
? Provide a GOOD service
? Growth- Increase in size may mean more
customers and more shops etc
?
No because…
DO ALL BUSINESSES
AIM FOR THE SAME THING?
Aims and Objectives
?
?
An Aim: A large broad, unspecific
target that a business has set for itself in
the future
An Objective: Smaller tasks that will all
contribute to the completion of the main
aim
Why is it important that an entrepreneur
has clear aims/objectives?
?
?
?
?
?
It helps with decision making/establish priorities
It helps investors
It provides targets
It can motivate everyone connected with the
business
It gives the entrepreneur and employees clear
direction.
Roger’s Sea Food Restaurant
?
?
?
?
?
?
Sea food restaurant in South end
10 years
Profitable, very popular
The main aim for Roger’s restaurant is to ‘ensure
total customer satisfaction’
Question: Why would this be the main aim?
Question: How could Roger go about trying to
achieve this aim?
Something is
missing…!!!
By how much?
By when? (deadline)
?
?
ACTIVITY
Write 3 objectives for yourself:
Life, career and relationships
What is an
objective?
? Something we seek to achieve
? BUSINESS OBJECTIVES perform
the role of a compass or guideline in
keeping the business on track.
OBJECTIVES
An objective should contain the action to be performed, the
condition under which it will be performed and a timeframe
in which it should be performed.
However, there are times when all three components might not
be present in an objective. In such a case we refer to it as a
‘partial objective’.
These partial objectives should contain the action to be
performed and a time frame in which the action should be
performed.
The nature, role and importance of business
objectives
Objectives serve as a guide for:
? Evaluating performance: measure success in achieving goals
over time
? Decision making: Sense of purpose and direction
? Efficiency: employees work in the interest of organisation and
use resources properly. Functions of business co-ordinated
? Consistency: employees work towards common purpose
Decision making
If you know your objective or your target, they you
know the direction in which the organization must
go.
For example- ‘to increase productivity by 4% in
the next three years’
What kind of decisions would the manager or
managers need to take to achieve this objective?
Possible actions
Reduce absenteeism
Ensure raw materials are available
Purchase newer machines
Provide incentives
consistency
Objective - ‘to reduce customer complaints by
50%’
When employees are aware of
objectives/goals/target, then they will work towards
it.
How can this be achieved?
Efficiency
When organizations go without objectives , then
they will perform as individuals and not as a group.
Evaluating performance
‘to save $ 50,000 within the next five years’
How can this be achieved?
Answer the questions below:
1.
Objectives help managers in making decisions.
consider the situation where a manager has set himself
the following objective
‘ to increase market share by 5% in the next four years ‘
?
Indicate four decisions the manager might make to
achieve this objective.
Possible answers
Increase advertising budget
Source additional outlets for distribution
Make prices more competitive
The nature of objectives
Objectives should :
* Be acceptable
* Motivate staff
* Be measurable
* Be capable of being broken down into shorter
periods of time.
* be simple enough to be understood by all workers
of the organization.
Well written objectives should have the
following characteristics- SMART
Specific
Timely
Measurable
Objective
Realistic/ Relevant
Attainable
SMART- specific, measurable,
attainable, relevant, timely
SPECIFIC- objectives should be quantifiable and
precise: for example , To increase retail sales by 15
per cent.
SMART
MEASURABLE- Managers should be able to plot the
organisation’s progress towards its objectives. This
requires a well-defined reference point from which to
start and a scale for measuring progress
for example- “To increase retail sales by 15% by the
end of this financial year.
SMART
ATTAINABLE(ACHIEVABLE)- WHILE the
objectives should be encourage people to work
harder, achieving them must be within their reach.
This is to say that the objectives should be not so
extreme that they are impossible for the firm to
achieve.
SMART
RELEVANT (OR REALISTIC)- many businesses
have failed because they set unrealistic and irrelevant
objectives,especially in their earlier years. As a
result, a large amount of money is spent irrelevantly,
perhaps to take on investments or a large advertising
campaign which could have delayed until the
company is established.
The objectives must be relevant for the firm given its
market share, resource base and employees’
capabilities.
SMART
TIMELY Objectives must specify not only what is to be
achieved but also a time frame for its achievement.
SUMMARY
Specific – should be detailed and definite.
Measurable – by how much?, i.e. figures and
percentages should be included.
Attainable – is the target possible to reach?
Relevant – does it follow the overall plan for the
business?
Time-Related – when will the target be achieved?
ACTIVITY- below is a set of objectives. Sate
whether or not they are written properly and
why.
1.An internet provider has a target of ‘reducing customers’ complaints from
5% to 2% within the next 12 months
2.Decarteret college football team wants to improve performance in the
future
3.A wellness centre and spa sets and objective of becoming ‘the best in the
market’
4. A franchise has the objective of increasing sales by 2% in the next quarter .
5. Lasco manufacturing plant desires to increase market share
from 10% - 40% within the next three years
Importance of objectives
Every organization aims to be profitable.
In order for an organization to be
successful, it needs to outline
measurable and achievable objectives.
This should be shared with employees
to understand the plan to get there.
Serves as a guide for employees
• Gives a sense of direction
• Analyze the performance of the
business and employees
• Helps with decision-making
• Function as a yardstick for tracking
an organisation’s performance
•
Types of objectives- short, medium
and long term
Short term speaks to a short period of time usually a year to 18mths.
These are usually critical for new businesses.
Medium term objectives are usually written for periods between
1-4years.
Long term objectives are usually written from the firm’s mission
statement and states where the firm wants to be in the future. Time
frame is usually written for periods more than 5years.
Examples of short term goals:
Study - I will read chapter 2 of my
chemistry text book at 5pm today.
Fitness - I will run 5km at 8am on
Saturday morning.
Money - I will purchase a money box at
Fontana this afternoon.
?
Examples of medium term goals:
?
?
?
Study - I will achieve 70% or higher in my
chemistry midterm exam.
Fitness - I will run in the Bridges Fun Run on
April 4th.
Money - I will save $100 in my money box by my
birthday.
Examples of medium to long term goals:
Study - I will receive an A for chemistry this year.
Fitness - I will run the City to Surf fun run in August
in under 60 minutes.
Money - I will save $300 in my money box by the
end of the year.
Examples of long term goals:
Study - I will study chemistry at Harvard in 2024.
Fitness - I will break the under 20's record of 38:12
in the City to Surf fun run before I turn 20.
Money - I will purchase a car for $10,000 in 2024.
Match the terms related to goal setting with its definition.
a. Goal
b. Goal Setting
c. Short-Term Goals
d. Medium-Term Goals
e. Long-Term Goals
_____1. The process used to determine what an individual wants to be, do, or
have, i.e., what a person wants to accomplish.
_____2. Goals that could take five years or more to accomplish.
_____3. A statement about what a person wants to be, do, or have,
accomplished by taking certain steps; provides direction to a plan of action.
_____4. Goals that are met between one and three years.
_____5. Goals that are obtained more immediately
HIERARCHY OF
OBJECTIVES
Aims/Vision
Purpose of the organization
especially for the external
audience
Mission statement
CORPORATE OBECTIVES
Strategic objectives
Tactical objectives
Operational objectives
Senior management,
the organization as a
whole
Middle management
, major division,
function
Lower management
Departments and
individuals
A hierarchy exists: one leads to the
fulfillment of the other.
Strategic objectives are at the core.
Tactical objectives must be achieved if the
strategic objectives are to be reached
Operational objectives must be met in order for
tactical objectives to be obtained
Corporate Objectives – guide as to how the
business plans to achieve its mission and
mission
Hierarchy of objectives
Vision
At the top of the hierarchy is the business’s aim. An
aim or vision is where the business wants to go in the
future.
It is a statement of purpose- for example, the business
aims to expand its market share across the Caribbean.
The vision of the firm is often broad, with very few
specifics as to when it will be achieved. It must be
able to motivate workers.
Vision
●
●
●
This is necessary for the success of any business.
It reflects the ideas and philosophies of all
personnel involved in establishing the firm
It will include what the firm expects to achieve in
the short-term,medium-term and long-term
Vision
From this vision the mission statement will be
established and from the mission statement will
follow the strategic,tactical and operational
objectives
While the terms ‘goal’ and ‘vision’ are sometimes
used interchangeably, the vision outlines the firm’s
goal which is said to be a desired future outcome that
the organization attempts to realise .
●
Mission statement
This is a statement which outlines the main aim of a
business or company.
A mission statement gives a clear outline of the
business’s aspirations and values. It enables all the
stakeholders (employees, managers, customers, and
suppliers) to understand the underlying reasons for
the actions that are taken by the business.
Mission Statement
Captures attitudes and expectations of
employees
Focus of activities for people to identify
with
Overtime, provides framework for
strategies in the business
Mission statement
While the firm’s vision outlines where it hopes to be
in the future, the mission statement usually says what
the firms sets out to do during its operation.
A good mission statement carries a number of
elements which will give a clear indication of the
strength and effectiveness of such a mission.
Mission statement
A well-written mission statement should:
* Give a clear indication of the purpose of the
organization.
*
outline the legitimacy of the organsation.
* Clearly describe the organization’s values,
objectives or targets and reason for existence
Mission statement
* Be customer focused or oriented and at the same
time catering to the needs of the employees and other
stakeholders
* Outline the products that are being offered and its
desire to maintain these
* State the firm’s commitment to the fulfilment and
satisfaction of customer’s need.
Mission statement
* Signal how it will maintain a competitive edge
over its rival organizations.
*
It serves as a compass which guides the business
* the strategic and tactical objectives flow from the
mission statement.
APPLE’s MISSION
STATEMENT
Short and long term objectives
Objectives
Target groups
Time period
Examples
Strategic
Top management
Long term
To create 2 new
(3-5 years), even 10 products in the next
years
5 years
Tactical
Middle
management
Medium term
(1-3 years)
To increase
production by
10% in 2 years
Operational
Lower level
management
Short term
(1 day to 1 year)
To meet weekly
production quotas
of 5000 items
SMART OBJECTIVES
ACTIVITY
Write a brief mission statement for
a business of your choice. The
business should be given a name
and mention must be made of the
product being sold.
TYPES OF BUSINESS OBJECTIVES
? Profit
? Growth
? Survival
? Sales
? Market share (Market leadership)
? Non profit objectives
Corporate Objectives
Cont’d
Corporate objectives help to narrow the focus and
can therefore be defined as specific, realistic and
measurable aims which organization plans to
achieve within a given period of time. These
objectives are usually written as long –term
objectives with a time frame. These are overseen
by senior management.
Example – to increase profits by 40% in all divisions
within the next five years
Strategic objectives
Strategic objectives are usually medium to long term and
relate to outcomes that strengthen an organization’s overall
business position.
They are high-level and measurable goals outlining what an
organization wants to achieve, with a clearly defined
deadline. They help organizations create strategic
roadmaps, initiatives, and projects that are aligned with the
company's strategy and vision.
Strategic objectives
The features of strategic objectives are as follows:
•These are broad based objectives that state what the firm
hopes to achieve in the long-run (e.g. the next five years)
• They tend to be more measurable.
They usually address responses to address major change
or improvements that outlines how a firm plans to
accomplish it corporate objectives.
For example: where would the firm want to be
positioned in its industry( 1st, 2nd,…..etc)
How will the firm increase its sales , i.e how it plans to
do so and by how much
Strategic objectives
Strategic objectives may include the following :
* survival
* increase sales by 10 per cent in the next 3 years
* increase market share by 20 per cent in the next
five years.
Tactical objectives
These are performance targets established by
middle management (department heads) for achieving
specific organizational outcomes. These types of
objectives aids in accomplishing a specific part of the
organizations strategy. Tactical objectives are usually
short term to medium term targets which the firm is
expected to achieve within a year or close to a year.
Cont’d
Tactical objectives are usually entrusted to the lower
positioned management in a three-tier organisation's
structure of field or front desk, middle and executive
management.
Tactical planning helps break down long-term plan
further into smaller, short-term goals with clearly
defined goals that enable companies to achieve them.
These short-term tasks are feasible to achieve, which
means that completing these will eventually fulfill the
company's strategic or long-term goal.
Operational objectives
These are short-term organizational objectives necessary to
achieve longer-term tactical and strategic objectives.
They are usually managed by lower- level management such as
a supervisory personnel who are concerned with immediate
result. They are focused on how the organization will achieve
these objectives.
Operational objectives are attainable, action-oriented, short-term
goals organizations set and accomplish as a means of partially
achieving larger, long-term objectives. They're typically
comprised of specific daily, weekly, or monthly tasks that —
when executed together — contribute to a successful broader
goal.
What are examples of operational
objectives?
The following are examples of common operational objectives:
? Cost - All companies try to keep costs down as they are
profit-oriented, once achieved, higher profits in addition to
increasing revenue. They compete directly on price. And costs
affect how many dollars they can charge customers
? Quality - company emphasizes product uniqueness to attract
them to buy the product
? Flexibility - Flexibility is how companies can adapt their
operations to changes in the business environment.
? Response speed - Success in marketing a product is about more
than just offering superior quality and to ensure goods are
available when customers need them
Cont’d
?
?
Value-added - Creating added value is vital for
businesses to operate and generate profits. Businesses
add value to products by processing inputs into
outputs. They then sell the output at a higher price
than it costs to produce
Environmental objective - transforming into an
environmentally friendly company will create a
positive corporate image, which in turn will impact
the company’s sales in the long term.
Summary
objectives
Target groups
Time period
Examples
Strategic
Top management
Long-term
i.
ii.
Tactical
Middle management
Medium term
i.
ii.
Operational
Lower-level
management
Short-term
To create two
new products in
five years
To increase
exports by 3%
in four years
To increase
production
levels by 2% in
6 months
To keep
advertising costs
at 3% of sales
over the next
eight months
To meet weekly sales
quota or 1000 units
ii. To prepare reports
within two days of
requests
Class activity- indicate whether the following are
mission statements, strategic, tactical or operational objectives
1. To increase productivity by 5% this year
2. To handle worker grievances in two days
3. To ensure the survival of a growing company
4. To add four new lines to our product range in five
years
5. To develop and maintain a positive image with
the public
Answer