Introduction to Business Management

1.3 Business Objectives

Vision statement:

A vague statement of what the organization would like to achieve and be in the long term (distant future).

Mission statement:

Specifies the business' purpose of existence, who they are, and what they do. It provides a sense of direction to the business in terms of what to accomplish or pursue.

Diagram

Business aims:

Long-term aspirations of an organization (overall target/goal).

Business objectives:

  • SMART targets that must be achieved to reach those aspirations (smaller targets that help reach that goal).
  • Aims and objectives align all the efforts of all employees towards a common vision and ensure that everyone is working towards the same goal, helping give them purpose.

Targets businesses set must be SMART:

  • Specific
  • Measurable
  • Achievable
  • Realistic/relevant
  • Time-bound

Common objectives:

  • Profit
  • Growth: increase in a certain metric(s) (e.g. market share, sales revenue, etc.)
  • Shareholder value: usually refers to dividends or share price increase
  • Ethical matters: tasks/targets that go beyond profit-making and are in line with moral behavior, sustainability, and CSR. Usually adopted by social enterprises.

Strategy vs Tactic:

Strategy: is how generally. It is the path from going where we are today to where we want to go (goal). General plan to reach the objective.

Tactic: Specific things, often tangible, that a business must do to achieve their strategy.

Diagram

Example:

For a video game business their goal, objective, strategy, and tactic may be the following:

  • Goal: Earn 40% market share of the video game global market
  • Objective: By the end of the year reach 20% market share in each of the main markets: USA, China, Japan, and Russia.
  • Strategy: Provide the best video games via our platform for all target markets based on gender, age, and income.
  • Tactic: Upload new games frequently to our platform based on reviews collected by the marketing team.

Corporate Social Responsibility (CSR):

Concept that businesses have a responsibility to consider and positively impact society beyond their economic interests.

  • Business morally accepts their obligation to society and not only shareholders.
  • Idea where companies voluntarily integrate social and environmental concerns into their business operations and interactions with stakeholders.

Benefits of CSR:

  • Reduced energy expenses
  • Reduced waste expenses
  • Reduced material expenses
  • Increased productivity
  • Reduced turnover
  • Increased media exposure and reputation
  • Brand loyalty
  • Reduced risk
  • Better reputation may lead to increased investments