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

1. Corporate and Functional Objectives

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".

4. What are objectives? Objectives are statements of specific outcomes that are to be achieved

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. A hierarchy of objectives Increasingly strategic Increasingly detailed

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. Corporate objectives Corporate objectives are those that relate to the business as a whole

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. Functional objectives Set for each major business function and are designed to ensure that the corporate objectives are achieved

13. Corporate v Functional Objectives Master Servant Corporate Functional

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. SMART objectives The SMART acronym helps management set effective objectives

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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