Topic 1: Business Organization And Environment

1.3 Organizational objectives
The importance of objectives
Explain the importance of objectives in managing an organization.



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Whether you know it consciously or not, all individuals usually have objectives that they hope to accomplish. However, clearly defining these objectives and visually focusing on them is what sets most of us apart.

Businesses are social organizations and in this respect also need a set of objectives in order to stay focused appropriately allocated time, money and other resources. As with the individual, the business’ objectives will keep everyone motivated and interested in meeting the common target.
Statements

Explain the purpose of mission and vision statements.
Analyse the role of mission and vision statements in an organization.

Mission statements

Mission Statements are short statement usually found hanging in the business where they are visible to employees. Most students will confuse Mission Statement as goals or objectives. However, a Mission Statement is a philosophy that answers the question “why do we exist”. It describes the fundamental purpose of the business. Almost all institutions have a mission statement. What is your schools mission statement?
Vision statements

A Vision Statement differs from a Mission Statement in that the Mission Statement refers to the present while the Vision Statement usually refers to future. The Vision Statement lures all employees into a belief about what the business wants to achieve.

Both the Mission and Vision Statements are at times impossible dreams that serve the purpose of providing a guiding light as to the philosophy of the organization and thereby motivate and unify the employees of a business as well as inform the public of its purpose.
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The Coca-Cola Mission Statement from their website

“Everything we do is inspired by our enduring mission:
To Refresh the World… in body, mind, and spirit.
To Inspire Moments of Optimism… through our brands and our action.
To Create Value and Make a Difference… everywhere we engage.”

The Coca Cola Vision Statement .

Distinguish between objectives, strategies and tactics, and discuss how these interrelate.

Aims and objectives

The aim of a business is what it wants to achieve by a future date and time. These are its goals and statements of purpose. For example a business may aim to control 25% of a specified market share before 2015.


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Business objectives are measurable targets of how the aims can be achieved. There are many different types of business objectives that an organisation can set, such as increasing profits by 20%, or expanding into another market within a particular time period. In all cases in order to make the objectives realizable an acronym used to set objective is SMART:
1. Specific – Objectives must be clear.
2. Measurable – Easy to determine if they are being achieved or not.
3. Achievable – They should within the reach of the business.
4. Realistic –Does the business have the resources?
5. Timely –A time-frame for should be set meet the objective.


Strategic objectives


These are broadly defined targets usually set by the strategic decision makers of the business, such as the board of directors of a corporation, and usually encompass the long term, more than 5 years. Strategic planning usually ends with a plan of implementation in the form of objectives. The tools used in Strategic Planning are the SWOT and PEST analysis, which we shall examine later in this chapter.

The acquisition or take-over of a public corporation would be a Strategic Objective while the purchase of 51% of the shares would be the objective. In this example, the means to accomplishing the strategic objective is by acquiring a majority number of shares.
Tactical/operational objectives


The day-to-day objectives are also called tactical or operational objectives. These objectives involve the planning behind the most efficient use of resources. Business managers are usually involved in the staffing of the business, the purchase of raw material or inventory and the allocation for production. The clear distinction here is that in larger organisations this would be the case, while in smaller businesses the strategic and operational be made by the same individual.
Ethical objectives

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Examine the reasons why organizations consider setting ethical objectives.

Analyse the advantages and disadvantages of ethical objectives.

Discuss the impact of implementing ethical objectives


In 1984 in the town of Bhopal, India, the Union Carbide Company leaked a highly toxic substance known as methyl isocyanate. The deadly gas left more than 2,500 people dead and 200,000 injured. While the company had followed the law, investigations revealed that the factory had experience previous problems with equipment design. Was the decision to build the company in the highly populated area prudent? Was it ethical? When a business from another country enters a country with laws that are not enforced as rigidly as theirs, are there ethical considerations that the business should take into account?


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In 1982 the Johnson & Johnson Corporation discovered that its Tylenol product had been tampered with and a deadly poison had been inserted. Tylenols manufacturer the McNeil Consumer Products Company, a subsidiary of Johnson & Johnson, its code of ethics, which mandated that the interests of its customers come first. At a cost of more that $100 million the products was recalled and pulled from the shelves and the corporation averted a financial and market image disaster. What were the ethical considerations?
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In 1989 an oil tanker belonging to the Exxon Shipping Company spilled approximately 11 million gallons of crude oil causing an environmental catastrophe. The oil tanker called the Exxon Valdez was captained by Joseph Hazelwood and caused of the largest ecological disasters. Because the environment is a common heritage that all members are collectively affected the punitive damages sought to correct this fault on the part of Exxon. The National Oceanic and Atmospheric Administration still claims that approximately 26,000 gallons of oil still remains on Alaska's shores and in its soil.
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The April 2010 British Petroleum oil rupture and spill at Deepwater Horizon has been calculated as being worse than that of Exxon Valdex. View this youtube clip for a comparison on reporting and the Bhopal disaster. The leak is estimated to have amounted to 140 million barrels of oil surpassing the 1989 Exxon Valdez oil spill as the largest ever.
Ethics is a branch of philosophy and in business it is those unwritten rules that are developed between members of society. A student cheating in an exam is unethical not because of the rules, but because their conduct will impact us negatively. They will have benefited unjustly, while you may have studied harder, or perhaps the exam will be made more difficult or cancelled all together. Ethics is therefore about honesty, fairness and justice.
As in the case of the examples given on Union Carbide, Johnson & Johnson, BP and Exxon, business ethics involves asking three basic questions. Is it legal? Is it balanced or fair from the perspective of others? How does it make you feel?

Law provides the standard for ethical behavior. However, there are circumstances in which the law does not qualify an action as ethical, even though it may be legal. A code of ethics serves to guide businesses and create an ethical culture and help managers make good judgments.

Ethical and responsible corporate behaviour may not benefit the business in the short term, however the long-term results will be a society rewarding the business with trust, loyalty and continued patronage.
Corporate social responsibility













Explain the different views that firms may take of their social responsibility in an international context.

Analyse the value of social and environmental audits to different stakeholders

Social responsibility means that the role of business is to serve the larger society by responding to its concerns. In this respect there are different types of ethical positions.
Differing views of social responsibility

Business organizations that only seek to ensure that the shareholders are granted higher returns on their investment are aligned to what is called the Inherence School of Thought. This is the case of the Meatrix example given above.
However a business from the enlightened self–interest school of thought recognizes that the shareholder is best served by being responsive to the society. The example of Johnson & Johnson and Tylenol above would illustrate this trait.
When business organizations are in economically less developed countries and adhere to the inherence school of thought, even though the of the country allow them to conduct their business accordingly, the issue of ethics as a component of social responsibility is critical to understand.

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Nestle Corporation has faced boycotts and still finds it difficult to avoid accusations due to its marketing of infant formula in economically less developed countries in the early 1970’s. Because of poor sanitation, refrigeration and education, infants suffered serious health problems when Nestle convinced the public to use their products instead of natural breastfeeding.

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A business’s reputation is as easily lost as that of an individual whose actions are unethical.

Policies to implement objectives of social responsibility (such as environmental auditing)

Social and environmental audits are self-imposed or external studies on the degree to which the business is meeting ethical standards of conduct. Because of the intensity of competition and pressures that are brought to bear on managers and business leaders, social and environmental audits serve to improve and foster an ethical culture. In line with this are codes of ethics that firms adopt to provide the needed guidance. Employees are also trained in these codes while self-reporting and investigation is an integral part of the social audit.
HL Changes in corporate social responsibility over time

Business, it could be argued, is rooted in trust. This at least is the origin of any transaction where both parties benefit. With growing complexities and global interactions the understanding of who is being engaged in the business transaction is at times a blur. The global market has also presented some unique challenges to business ethics. Multinational corporations are subject to ethical considerations in multiple countries and as you can imagine, moral standards do vary across cultures. Responsibility has therefore become a legal matter with pressure groups playing an every growing role to ensure that the interests of society that the law does not adequately meet are represented.
HL Changes in society’s expectations of the behaviour of firms

HL Analyse the impact that changes in societal norms have on the way that firms behave in a national and international context.

As information becomes more pervasive and members of society are more easily informed on misconducts by corporations in domestic of foreign affairs, the public has come to realize that pressure can be exerted on firms to act responsibly. This pressure is usually where it hurts the business organization the most, the bottom-line. As illustrated in the case of Nestle Corporation, the boycotts that were exerted by members of societies outside of the economically less developed countries worked. This essentially means that global movements by pressure groups can be locally organized and have a global reach. This clearly indicates that societal members have begun to feel increasingly empowered and in this respect have taken a more proactive stance on the behavior of firms.
What happens when customs and culture encounter each other in the business environment? Which national code of ethics should prevail? In the context of operating in foreign countries, many businesses maintain that a competitive edge is impossible without compromising ethical standards. These so called facilitation payments, or bribes are permitted under the Foreign Corrupt Practices Act, but as mentioned earlier, legality still does not make the actions ethical.
HL Discuss why a firm’s view of its social responsibilities may change over time.

HL Discuss why attitudes towards social responsibility may change over time.

HL Analyse the reasons why firms may choose different strategies towards their social responsibilities

Twitter, Facebook and other social networking platforms have begun to gain the attention of marketing executives in an every globally competitive world. With this comes the question of how to compete in the face of a society that demands more responsible business. Competition has become so intense that business survival is threatened, however, making poor ethical judgments will not only cost the business its clients but also drive employees away. There are always opportunities for business executives to weigh the short-term benefits of unethical , however, true leadership is the ability to see around the corner. Reflection Point torch.gif

We have looked at goals, objectives, strategies and the ethical responsibilities of business organizations. Attaining businesses objectives will become more likely for a company if social and ethical standards of operation are met.
1) Your task is to visit and familiarize yourself with the Berne Declaration. Thereafter, identify a company that has been awarded a Public eye award and in 150 words state why the company deserved the award. Go to the discussion tab and post thoughts on why you chose the company and the reasons. Comment on one other persons entry.
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Click the Public Eye to view a video on the awards
2) For further discussion on topics of interest go to Netvibes.com and comment on news article posts.
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What is a mission statement?
What are objectives, strategies and tactics ?
What is ethics and social responsibility Who do these interrelate?describe how these interrelate?