Introduction to Corporate and Functional Objectives


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An introduction and overview of the role of objectives in business strategy

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Introduction to Corporate and Functional Objectives

  1. 1. Corporate and Functional Objectives
  2. 2. What is business strategy? "Strategy is the direction and scope of an organisation over the long-term : which achieves advantage for the organisation through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfil stakeholder expectations".
  3. 3. Business strategies are about… <ul><li>Where the business is trying to get to in the long-term </li></ul><ul><li>The markets a business should compete in and the kind of activities that are involved in such markets </li></ul><ul><li>How the business can perform better than the competition in those markets ( competiveness ) </li></ul><ul><li>The internal resources (skills, assets, finance, relationships, technical competence, facilities) that are required in order to be able to compete </li></ul><ul><li>The external, environmental factors that affect the businesses' ability to compete </li></ul>
  4. 4. What are objectives? Objectives are statements of specific outcomes that are to be achieved
  5. 5. Business objectives are… <ul><li>The specific intended outcomes of business strategy </li></ul><ul><li>The anticipated end results of a programme of activities </li></ul><ul><li>Targets which the business adopts in order to achieve its primary aims </li></ul>
  6. 6. Where do objectives fit in? The overall purpose of the business The overall aspiration of the business General statements of what business intends to achieve More precise & detailed statements of the aims / goals
  7. 7. A hierarchy of objectives Increasingly strategic Increasingly detailed
  8. 8. The hierarchy - example Corporate Objective Functional Objective Unit Objective Market share of 12% Sales per customer of £45 Shop sales of £500,000
  9. 9. Corporate objectives Corporate objectives are those that relate to the business as a whole
  10. 10. Purposes of corporate objectives <ul><li>Provide strategic focus </li></ul><ul><li>Measure performance of the firm as a whole </li></ul><ul><li>Inform decision-making (which involves choice!) </li></ul><ul><li>Set the scene for more detailed functional objectives </li></ul>
  11. 11. Key areas for corporate objectives Area Examples Market standing Market share, customer satisfaction, product range Innovation New products, better processes, using technology Productivity Optimum use of resources, focus on core activities Physical & financial resources Factories, business locations, finance, supplies Profitability Level of profit, rates of return on investment Management Management structure; promotion & development Employees Organisational structure; employee relations Public responsibility Compliance with laws; social and ethical behaviour
  12. 12. Functional objectives Set for each major business function and are designed to ensure that the corporate objectives are achieved
  13. 13. Corporate v Functional Objectives Master Servant Corporate Functional
  14. 14. Relationship between corporate and functional objectives Functional objectives are meant to act as the servant to the master corporate objectives Corporate Objective Example Functional Objective Increase sales Successfully launch five new products in the next two years ( marketing ) Reduce costs Increase factory productivity by 10% by 2012 ( operations ) Increase cash flow Reduce the average time taken by customers to pay invoices from 75 to 60 days ( finance ) Improve customer satisfaction Achieve a 95% level of high customer service ( people )
  15. 15. SMART objectives The SMART acronym helps management set effective objectives
  16. 16. SMART Objectives S Specific The objective should state exactly what is to be achieved M Measurable An objective should be capable of measurement – so that it is possible to determine whether (or how far) it has been achieved A Achievable The objective should be realistic given the circumstances in which it is set and the resources available to the business R Relevant Objectives should be relevant to the people responsible for achieving them T Time Bound Objectives should be set with a time-frame in mind. These deadlines also need to be realistic
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