1.

3 Business Objectives:

Strategic objective – strategy: mid-term objectives, tactical

objective, and then tactics and clarify that they might not be mid-term
objectives, having tactical directly

O1: Vision statement and mission statement AO2

Vision Statement Mission Statement

 It defines where the business  It illustrates the business’s

wants to be in the future purpose of existence, including
(ultimate) its values: why it exists and how
 Source of inspiration for internal it will reach its vision
stakeholders  Narrow and specific statement
 Broad statement (might be (might be considered as an
considered as a disadvantage) advantage)
  They do not change

Tip – Which do we write first?

 Usually, we start by the vision statement and then we think of the mission
that would allow us to achieve that vision.

O2: Common business objectives including growth, profit,

protecting shareholder value and ethical objectives AO2

Objectives:
 Objectives are the targets an organization is aiming to achieve.
 Objectives can be:
 Strategic: long-term objectives, which are also called Goals
 Mid-term objectives: medium-term objectives
 Tactical: short-term objectives
 The typical time intervals of the 3 types of objectives (not a rule but
common practice) are the following:
 Strategic objectives: 3-5 years
 Mid-term objectives: 1-2 years
 Tactical objective: less than 1 year (weeks to months)
 They are usually set as SMART: specific, measurable, achievable,
realistic, and time constrained.
 SMART objective example: achieve sales growth of $250m by
2027, or to increase market share by 3% by 2027
 They provide a sense of direction to employees, managers, departments
and the organization as a whole.

Transition = we’ll cover some of the common objectives business have.

1) Growth:
  Growth refers to an increase in the size of a business, which is measured
through certain metrics, such as sales revenues, number of employees,
capital employed, and market share.
 If a firm grows, then this implies that it enjoys improved brand awareness,
more economies of scale, increased market power, and earns more sales.
 Growth can benefit owners and shareholders in the long term by providing
greater dividends. Employees and managers can benefit from being
offered higher salaries and better job security.

2) Profit:
 It’s the difference between a firm’s total sales revenue and its total costs,
left to be taken by the owner/distributed as dividends to shareholders, or
reinvested back in the business.
 It is the most common objective for for-profit businesses.
 It’s the conventional measure of business success.
 Employees and managers may have their bonus/reward linked to the value
of profits that the business generates during the year. This can help to
motivate them to meet or exceed targets.
 For new businesses, it can take several years before any profit is earned,
as it takes time and money to establish a business, its products, and brand
awareness. Yet, a business cannot survive in the long term without earning
any profit, which is why we see many startups closing.

3) Protecting shareholder value:

 Shareholders are the owners of companies (privately held and publicly
held companies).
 The BOD, CEO and executive team are responsible for protecting the
interests of the shareholders.
 Shareholder value is made of 2 elements: capital gain and dividends.
 Capital gain: it’s the profit shareholders make from selling their
shares at higher prices than the ones they bought them at.
▪ A company’s share price will increase when there is higher
demand for its shares, which is based on the financial
 performance of the company indicating the level of profits that
the company is earning/expected to earn.
▪ Share prices are also dependent and affected by the
perceived quality of the senior management team and the
strategic plans that directors have in place.
▪ Confidence in the stock market refers to the level of trust and
optimism that investors have about the future performance of
the market. When investors are confident, they believe that
the economy is strong, companies will perform well, and stock
prices will rise. This leads to more buying, which can drive
stock prices up. Conversely, when confidence is low, investors
fear economic trouble or poor company performance, leading
to more selling and falling stock prices
 Dividends: they are a share of a company’s profits that is distributed
to its owners (shareholders).
▪ In many companies, the dividend payment to shareholders is
low/little because the focus is on investment and long-term
growth (so reinvesting it back into the company).
 Thus, the main source of gain for shareholders for investing in a
company is the capital gain.
 In other businesses, there is more focus on short-term dividend
payments to shareholders, who may be highly influential owners of
the company.

4) Ethical objectives:
 These are business targets based on moral principles and ethical
standards, aimed at promoting behaviors and outcomes that are
considered morally right, just, and beneficial to individuals and
communities.
 In other words, they are the specific objectives that an organization sets in
order to ensure that their actions align with their values, ethical standards
and moral principles.
  Values: they are the core principles, ethical standards, and beliefs
that guide an individual’s or organization’s behavior and decision
making. They represent what is considered important, desirable, and
morally correct (also labelled as corporate values and found on
companies’ websites, next to mission and vision statements).
 For example:
 Value: environmental responsibility
 Ethical objective: reduce company carbon emissions by 25% over
the next 3 years
 There is an increasing interest in the ethical behavior of businesses from
many stakeholders. This is largely due to education and the influence of
social media.
 Ethical objectives can help a business to build a more reputable and
respected brand.
 This can, in the long term, lead to increased sales, improved
customer loyalty, and higher staff retention, as well as attract more
investments.
 However, there are high costs of implementation and compliance.
For example, some businesses may choose to pay workers more
than the legal minimum wage (an ethical act to safeguard the
wellbeing of their employees), but this increases their costs.

O3: Strategic and tactical objectives (AO3)

Strategies:
 It’s the long-term plan (roadmap) comprised of medium-short terms steps
and actions to achieve the strategic (long-term) objectives.
 These are the ways in which an organization intends to achieve its
strategic objectives (long-term).
 Strategies, in the everyday life, can also be referred to as the way to
achieve an objective.
1) Corporate Strategy:

A Corporate level strategy defines the overall direction and vision of the
organization, and the markets and industries it wants to compete in. It also sets
the goals and objectives for the entire organization, and allocates resources
among different business units. Corporate level strategy is usually formulated by
the top management, such as the CEO and the board of directors, and covers a
long-term horizon of 5 years or more. An example of a corporate level strategy is
deciding to expand into a new geographic region or a new product category.

2) Business Strategy:

In order to achieve my goal of profitability, I need to sell this product to this

market. The product that I’m selling to this market will provide my customers with
the following values. In order to be able to produce this product offering these
values to its market, I need to complete these core activities.

3) Functional Strategy:
 It’s formulated by the managers of each function unit (Department)

 it’s mainly concerned with the core activities in the value chain.
 This answers how to implement the business strategy; what should each of
the different functions in the company (departments) do from each of their
sides in order to implement the business strategy
 Hence, it supports the business level strategy through the work of each
function in order to collectively achieve it
  The goals and work of each function should align with the goals and
objectives of the business strategy
 For example: developing a marketing campaign to promote a new product
launch or increasing the productivity of a manufacturing process

Competitive Advantage: It’s a sustainable edge a company holds over its rivals
that allows it to generate superior profits and outperform competitors in the
marketplace. This advantage is typically rooted in a unique combination of
resources, capabilities, and strategies that are difficult for competitors to replicate
or imitate.

VRIO Framework:
 Simply said: if the resources (resources AND capabilities) you have satisfy

these criteria, then it would allow you to gain and sustain a competitive
advantage.
 For a resource to be the basis of superior performance, it needs to be:
 Valuable: A valuable resource is one that enables the firm to exploit
an external opportunity or offset an external threat.
 Attractive features
 Accessibility
 Lower costs and prices
 Higher profits
  Honda – design and build engines
 Rare, and costly to: A resource is rare if only one or a few firms
possess it.
 Only a few firms possess it.
 Toyota – lean manufacturing
 Imitate. And finally, the firm itself must be: A resource is costly to
imitate if firms that do not possess the resource are unable to
develop or buy the resource at a comparable cost.
 Unable to develop or buy at a reasonable price.
 Apple - yes
 Crocs - No
 Organized (internally) to capture the value of the resource: To fully
exploit the competitive potential of its resources, capabilities, and
competencies, a firm must be organized to capture value—that is, it
must have in place an effective organizational structure and
coordinating systems and you must be able to know how to use it
effectively.
 Exploit competitive potential

Strategic Objectives:
 These are the long-term objectives, comprised of corporate decisions
made by the senior management team/executive board.
 Examples of strategic objectives include expanding geographically,
increasing market share, becoming a market leader, and building a strong
brand reputation.
  Hence, they are objective that would take a relatively long time to achieve.

Tactics:
 Tactics refer to the specific actions, steps, or methods employed to
achieve short-term objectives and support broader strategic goals.
 The responsibility for making these decisions is given to employees lower
down in the hierarchy.
 Tactics are the building blocks of a strategy for achieving a goal, which
means that they are the steps and actions listed in a strategy for achieving
a desired goal.

Tip – Difference between tactical objectives and tactics?

 Tactical objectives define what you want to achieve within the short-term
 Tactics are the specific actions you implement in order to achieve your
tactical objectives.

O4: Corporate social responsibility (CSR) AO3

Corporate Social Responsibility (CSR): also referred to as corporate

citizenship, is a management concept explaining the idea that a business has a
responsibility toward the society and the environment in which it exists, implying
that it needs to contribute to the improvement of the society and the environment
where it operates instead of harming it, or just staying neutral.
 It is also defined as the business taking responsibility for their impact on
society and the environment: this means that companies acknowledge the
effects their business activities have on society and the environment, and
they actively work to manage and mitigate these effects, but to also
contribute to the welfare of society and the environment.
 In summary, companies applying CSR, who are then called socially
responsible companies, try to operate in ways that enhance rather than
degrade society and the environment.
  Attitudes towards CSR can change over time. What was previously
considered socially acceptable, such as getting a new plastic bag each
time you buy something at the supermarket, may no longer be the case
today. Environmental protection was not a major corporate priority until the
1980s.
 Hence, changes in societal norms, expectations, and values mean that
organizations may need to review their CSR policies and practices from
time to time.

4 Categories of CSR Practices:

 Environmental responsibility (environmental stewardship): it implies
behaving in as environmentally friendly as possible. This can be done in
several ways:
 Reducing harmful practices: decreasing pollution, the use of plastic,
water consumption and waste
 Regulating energy consumption: increasing reliance on renewables,
sustainable resources, and recycled or partially recycled materials
 Offsetting negative environmental impact: planting trees, funding
researching, donating to related causes etc.
 Ethical Responsibility: it’s concerned with ensuring an organization is
operating in a fair and ethical manner. Organizations that embrace ethical
responsibility aim to practice ethical behavior through fair treatment of all
stakeholders, including leadership, investors, employees, suppliers, and
customers.
 Firms can embrace ethical responsibility in different ways. For
example, a business might set its own, higher minimum wage if the
one mandated by the state or federal government doesn’t constitute
a “livable wage.”
 Likewise, a business might require that products, ingredients,
materials, or components be sourced according to free trade
standards. In this regard, many firms have processes to ensure
they’re not purchasing products resulting from slavery or child labor.
 Philanthropic Responsibility: it refers to a business’s aim to actively
make the world and society a better place. In addition to acting ethically
and environmentally friendly, organizations driven by philanthropic
responsibility often dedicate a portion of their earnings to philanthropic
causes.
 While many firms donate to charities and nonprofits that align with
their missions, others donate to worthy causes that don’t directly
relate to their business.
 Others go so far as to create their own charitable trust or
organization to give back and have a positive impact on society,
such as Sawiris Foundation for Social Development.
 Economic Responsibility: it refers to a company's duty to operate
profitably and sustainably while adhering to ethical standards and
contributing positively to economic development such as by decreasing
unemployment through the creation of jobs, practicing transparency in
financial reporting and adhering to accounting standards, and exporting to
increase the availability of foreign currency.
 Legal is mentioned sometimes instead of environmental which implies
complying with legal regulations and requirements relevant to their industry
and geographical location, ensuring they operate within the bounds of the
law.
Tip – How is it related to ethical objectives? CSR is the implementation of the
ethical objectives

Tip – Is any company applying CSR considered a social enterprise?

 No, companies practicing CSR may integrate social and environmental
considerations into their operations, but their primary objective remains
profit-making.
 Yet, a social enterprise typically refers to a business whose primary goal is
to create positive social change, prioritizing this over profit maximization
(not eliminating it because it’s the engine that keeps the business running
at the end).

Tip – Fake CSR: There is a risk of companies engaging in "greenwashing" or

superficial CSR activities that are more about marketing and public relations than
genuine social or environmental improvement.

Advantages for a company Limitations/drawbacks to pursuing

engaging in CSR CSR

 It can increase employee  It costs more and may reduce

motivation and productivity. the overall level of profits if the
Businesses might also find it business is not able to raise
 easier to recruit and retain their prices to compensate
employees because they are  As competitors are in pursuit of
regarded as ethical employers similar socially responsible
 It improves a company’s practices, any USP (Unique
reputation Selling Point) might be short
 It fosters trust with different lived, which means using CSR
stakeholders to gain competitive advantages
 It can help to reduce negative is not necessarily sustainable.
publicity from the mass news  What is considered socially
media and pressure groups acceptable in one country might
 It helps avoid negative not be in others, which adds
government intervention and additional costs for multinational
unwanted media attention companies
 It makes customers more loyal
to the company, by showing its
commitment to their wellbeing
beyond economic gains, which
can lead to more sales