. What business is the organisation in?
. Who is to be served?
. What benefits are to be provided?
. How are consumers to be satisfied?
Objectives.
Business objectives are medium- to long-term goals or targets that provide
a sense of direction to the business. Objectives are normally measurable
and have a stated timescale.
Company may have a number of objectives. In general, the objectives
pursued by a business tend to vary according to its size, ownership and
legal structure.
Figure 1.1 illustrates the interrelationship between a company’s mission
statement and its objectives.
Figure 1.1: The hierarchy of objectives
The goals pursued by any business can be separated into primary and
secondary objectives.
. Primary objectives are those that must be achieved if the business is
to survive and be successful. These relate to issues such as profit
levels and market share.
. Secondary objectives tend to measure the efficiency of the
organisation. They may affect the chances of success, but only in the
long term. Examples include administrative efficiency and labour
turnover rates.
Profit maximisation.
Profit maximisation one of the most important objective for companies which
are owned by shareholders. Profit, at is simplest, refers to the extent to
which revenues exceed costs, so profit maximisation occurs when the
difference between sales revenue and total cost is greatest.
Survival.
Survival is an important objective for many businesses. It is particularly
important when businesses are vulnerable such as:
. during their first few years of trading
. during periods of recession or intense competition
. at a time of crisis such as a hostile takeover.
Most recently established businesses have survival as an objective.
Increasing sales or market share.
Growth increases the scale of a business, resulting in higher levels of
output and more sales. Many businesses pursue growth strategies because
their managers believe that this is essential for survival. If a firm
grows, it might be able to attract more customers, earn higher profits and
begin to establish itself in the market.
Growth offers:
. increased returns for the owners of the business
. higher salaries for employees of the business
. a wider range of products for the business’s existing and potential
customers.
Growth can be important target for managers. It is increasingly common for
managers’ pay packages to be a combination of shares and salary.
Providing social or community service.
A number of organisations provide services to the community. These
organisations are part of the public sector – they are managed, directly or
indirectly, on behalf of the government – yet they are a form of business.
Their overriding objective is to provide the best positive service to the
local community.
Charitable and non-profit objectives.
Charities have a high profile in the UK. Charities have a number of clear
objectives:
. to rise the public’s awareness of the cause that thy support.
. To rise funds to support their projects.
Charities trade with the intention of earning as much revenue as possible
to spend on their particular causes.
Producing high quality products.
Just as many businesses seek to provide high quality service, a large
number of businesses also have the provision of high quality product as an
important objective. Acquiring reputation for top quality can allow
businesses to charge a premium price and to enjoy higher profits.
Reputations for supplying quality products are jealously guarded.
Tesco is committed to retaining its position as the UK’s largest
supermarket retailer. Customer feedback forms, in-store discussion groups
and a continuous analysis of sales figures has enabled Tesco to recognise
the importance of the key principles of price, quality and service.
The company owes its success to its emphasis on meeting changing customer
needs through service and innovation, while maintaining its commitment to
value and quality.
Underlying its business success is a commitment to upholding certain
values and working and working principles and seeking continuous
improvement in its ethical performance.
Companies are part of the society in which they operate and must take note
of the interests and concerns of many different groups. For Tesco these
includes its customers, its stuff, its shareholders, its suppliers and
people in the local communities close to its stores and in the world
beyond. Each group has expectations of the company which Tesco has to meet
and manage if it is to maintain its position as a leading and successful
retailer.
Tesco must serve its customers by providing the goods they want and the
service they expect. By meeting customers needs better than its
competitors, Tesco earns profits and creates value for its shareholders.
Tesco, like other large companies, however, recognises that its wider
reputation depends on other things such as its stuff relations, its
attitude to the environment, its support to the community, and its
relationships with suppliers. Also as a leading food retailer, the company
must ensure that its provides products which are safe to eat or use, as
well as giving customers advice on matters such as healthy diets.
Tesco’s main business objectives:
. to provide customers with outstanding, naturally delivered, personal
service
. to earn the respect of its stuff for the values and appreciate their
contribution
. to understand customers better than anyone
. to be competitive even on the basics
. give customers a broad range of strong relevant promotions in all
departments of the store
. give customers what they want under one roof
. provide an environment that is easy and pleasant to shop in
. upgrade existing stores to the standards that is expected from Tesco
. to recognise Tesco has brilliant people, use this strength to make
customers’ shopping enjoyable in a way no competitor can
. use intelligence, scale and technology to deliver unbeatable value to
customers in everything Tesco does
. to maximise profits to provide high returns for shareholders
. to increase sales or market share as much as possible
. advertising should appeal to all customers in a relevant
Tesco’s main mission statements:
. To be world’s best and largest supermarket retailer.
. Completely increase value for customers, and to earn their time
loyalty.
How Tesco is going to achieve these objectives?
What Tesco expects from its staff in order to achieve this?
Tesco staff:
. Are all retailers, working as a one team.
. Trust and respect each other.
. Respect all customers, the community, suppliers and the competition.
. Strive for personal excellence in everything they do, leaving no stone
unturned in order to get it right.
. Are encouraged to take risks, give support and do not blame others.
. Are rewarded for creating value for customers.
. Are talked and listened to: and their knowledge is shared, so that it
can be used.
. Have fun, celebrate success and learn from failure.
What is the comment Tesco has to its customers?
Tesco customers want the best possible value for their money. Tesco is
determined to offer its customers quality products, good service,
attractive stores and low prices.
To meet this aims, Tesco:
. works closely with suppliers to ensure products are of the highest
quality and are delivered to stores in the best possible condition.
. makes sure that its staff are committed to giving the best possible
quality of service.
. aims to create in its stores an environment which makes shopping easy,
interesting and comfortable.
For example, in 1993 Tesco introduced Value lines, which offer exceptional
value for money, followed by New Deal Pricing on leading commodities and
brands in 1994. In 1996, Tesco introduced Unbeatable Value with the pledge
that nobody would sell the equivalent product for less price.
E3
Organisational functions.
All organisations require resources to carry out their functions. One way
of judging the success of a business is to compare the resources it uses
with the value of the product that results. For example if it is a small
business running by it’s owner, for example small shop, so it doesn’t need
any workers, large piece of land and big capital, owner can work alone. But
if it is a very large business like car manufacturing so it requires a lot
of workers, very large piece of land and big capital.
The resources of the business.
One way of considering the resources used by a business is to classify them
into the factors of production. The main capital of production are capital,
labour and land.
- CAPITAL refers to any manufactured product used by the
business to make other products. This category
therefore includes all machinery, vehicles and office
equipment used in businesses. It also includes the
company’s buildings.
- LABOUR is the human resources used by business
organisations during production.
- LAND – site on which the business is located and
natural resources it might use.
- ENTERPRISE – owners and shareholders.
Functional areas.
All businesses combine factors of production as an essential part of their
production activities. To combine these factors, to engage in production
and to achieve their objectives organisations undertake a number of
functions. The major business functions include:
. finance
. production
. human resources
. administration
. research and development
Business requirements for functional areas depends on its size, for example
small business might merge many of these functions within their
administration department, with responsibility in the hand of one or two
people. As a business grows the number of people required to carry out
these functions increases.
The financial function.
Extensive use of IT
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