IMPROVE THE FOLLOWING INFORMATION AND CONNECT EACH POINT TO MCDONALD’S BUSINESS
In this unit, I will discuss the different aims and objectives that businesses may have, and I will describe their distinct functional areas. I will also explain how these functional areas interact with each other, both within the business and with the outside world.
Aims and Objectives
Businesses serve various purposes, and each of them can be divided into different kinds: aims and objectives. Every business has its unique aims and objectives. Aims are the big goals and aspirations that a business wants to achieve in the future. They express the company’s general targets and long-term purposes. On the other hand, objectives are specific, measurable goals that a business expects to accomplish. It provides a clear plan, since they act as steps the company needs to take in order to achieve their overall aims.
These purposes guide businesses in their operations and the decisions they make. Additionally, aims and objectives can be linked to the mission and vision statements, which provide a sense of purpose and direction to a business.
Mission Statements: provide a clear idea of what the core values and purposes of a business are, explaining how it will reach its objectives. This allows employees, managers and customers to understand the actions of the business, leading to a more efficient workplace.
Vision Statements: portray the aspirations of where the business wants to go in the future, detailing the long-term vision of the company.
Types of Businesses:
There are different types of businesses, which divide into three main categories: private, public and not-for-profit. The kind of category a business is in, influences its aims and objectives. There are distinct purposes for their respective categories. A private business often focuses on generating the maximum amount of profit possible, and expansion (e.g., Apple). A public business has both financial goals and social responsibilities, so it may aim to provide high-quality services (e.g., hospitals). A non-for-profit organization is mainly involved in philanthropic activities, aiming to contribute to society without pursuing profits (e.g., Red Cross).
Also, these goals are divided into different time frames, which are applied uniquely depending on the business. Short-term objectives are target achievements within a year (e.g., meeting specific sales goal). Medium-term objectives refer to targets within 1 to 3 years (e.g., venturing into markets). Long-term goals are targets that require more than 3 years to accomplish (e.g., becoming sustainable).
Importance of Aims and Objectives:
Setting aims and objectives is important, because they help businesses know where they are going, motivate employees by giving them clear goals, and allow the business to measure its general progress. Aims and objectives are set for a company with the purpose of making the decision-making process easier and with better outcomes. This allows the business to focus on the main area in which they should concentrate their efforts. Aims provide a sense of motivation to the employees, portraying a clear image of what the company will become in the future. This encourages them to increase their productivity (therefore efficiency) in accomplishing the objectives, which are the steps the business must take in order to meet its aims.
Risk of Failure:
Failure is often caused by a variety of factors such as vague objectives or aims being incapable of achieving. If aims and objectives are vague (not clear), they can cause problems for a business. This includes: Lack of focus, since vague objectives lead to employees to be confused and wasting effort. Unclear success, because if the objectives are unclear, it is difficult for a company to know if they are succeeding. Low motivation, since people may feel demotivated if goals seem impossible to achieve. Poor resource use, as resources like time and money can be wasted on unclear goals.
Failing to achieve its aims and objectives can have significant consequences for a business. Firstly, there could be a waste of resources invested in the company, therefore an economic loss. This can mean decreased financial performance, which might potentially lead to a loss of investor confidence (since the business’ reputation has been affected), lowering the firm’s market value. Additionally, in the internal part of the company, employees’ motivation might decrease, leading to a negative impact on their productivity and work efficiency in the business. Long-term, these impacts might lead the company to bankrupt, putting at risk its survival.
SMART Goals:
In order for a business to not fail at achieving its aims, it must prevent failing at meeting its objectives. The most effective way to do this is to set SMART goals. -SMART objectives make it easier for the company to define and comprehend their objectives more precisely, leading to a better collective understanding and increased efficiency.
S – Specific: objectives must be defined in detail, applying to the respective conditions and aspirations of the company.
M – Measurable: businesses must put a value to their objectives in order to be able to evaluate if the objectives are being met.
A – Agreed: all the company’s stakeholders must approve their objectives, for them to be on the same page, and complete these objectives more successfully.
R – Realistic: objectives should be challenging, but also achievable by the business, taking into account their current size/scale.
T – Time-bound: there must be a limit of time regarding when the objective needs to be met.
Identifying a company’s objectives following the SMART acronym is more likely to give them better outcomes and be beneficial to the business: having corporate goals helps management of the firm to be more efficient, by providing direction and focus. However, there are some downsides to having corporate goals. This includes, that following this strategy (even though it is for the greater good of the company), it is impossible to satisfy everyone’s needs and wants. This might lead to demotivation in some employees, causing efficiency to decrease, and a contrary effect to the one businesses aim to achieve.
Aims of Businesses:
In addition to SMART objectives, it is also important for businesses to have clearly defined aims, since this provides a better idea to the stakeholders of where the company aspires to go.
The main aims of businesses are:
Profit maximization – Involves trying to make as much profit as possible (most common aim of owners and shareholders).
Survival – Short term objective, mainly for small new businesses entering the market, or for any company at a time of crisis.
Growth – Involves aiming to make as many sales of goods/services as possible.
Break-even – Method for surviving that involves covering just the amount of costs needed to run the business (creates no profit, and no losses).
Market share – Increasing market share means increasing their percentage of sales in a specific market (can be done by moving away from competitors).
Sales – Number of goods/services a business sell (increasing sales is a common aim).
Service provision – Offering a new service in order to attract more customers.
Setting out Aims and Objectives:
Example: Small Coffee Shop Business
Mission Statement: To provide great coffee and excellent service in a friendly environment.
Vision Statement: To become the go-to coffee shop in the neighborhood, known for quality and sustainability.
Objectives:
Increase customer base by 20% in one year through marketing efforts.
Maintain a high customer satisfaction rating of 90%.
Reduce costs by 10% through efficient operations.
Source 50% of coffee beans from sustainable suppliers.
Functional Areas in Two Contrasting Businesses:
Nike and Starbucks
Sales
Nike: Sells products online, in their own stores, and through other retailers. They team up with famous athletes to promote their brand and boost sales.
Starbucks: Sells coffee and food in their shops, and also in grocery stores and online. They use loyalty programs and special offers to attract customers.
Purchasing
Nike: Buys materials and finished products from suppliers around the world. They focus on getting good quality at the best price.
Starbucks: Buys coffee beans and other ingredients, making sure they are ethically sourced and high quality.
Manufacturing
Nike: Makes their products in factories around the world, focusing on innovation and sustainability.
Starbucks: Roasts their coffee beans in their own plants to ensure consistency and quality.
Administration
Nike: Handles business operations from their main office and regional offices, overseeing logistics, HR, finance, and IT.
Starbucks: Manages operations from their headquarters and regional offices to keep everything running smoothly.
Customer Service
Nike: Provides support through online chat, email, and phone to help customers with their issues.
Starbucks: Focuses on great in-store service and has an online platform for customer feedback.
Logistics
Nike: Manages a complex delivery system to get products to stores and customers. Uses technology to keep track of inventory and orders.
Starbucks: Ensures timely delivery of fresh ingredients to their stores using regional distribution centers.
Finance
Nike: Plans and monitors their money, making sure they stay profitable and manage financial risks.
Starbucks: Handles budgeting, forecasting, and financial reporting to support their operations globally.
Human Resources (HR)
Nike: Focuses on hiring, training, and retaining talented employees, promoting a culture of innovation and diversity.
Starbucks: Engages employees through training and development, providing a positive work environment with growth opportunities.
IT Support
Nike: Uses technology to improve product design, manufacturing, and sales. Analyzes data to make better decisions and improve customer experience.
Starbucks: Uses technology to support store operations, customer loyalty programs, and mobile ordering.
Marketing
Nike: Invests in advertising, sponsorships, and social media to build their brand and promote new products.
Starbucks: Markets their brand through ads, promotions, and social media, focusing on customer loyalty and experience.
Research and Development (R&D)
Nike: Invests in developing new products and improving existing ones. Works with athletes to test and enhance products.
Starbucks: Develops new food and drink items and works on improving coffee quality.
Legal
Nike: Manages legal issues like intellectual property, contracts, and compliance with regulations.
Starbucks: Handles legal matters including trademarks, contracts, and compliance with food safety laws.
How Functional Areas Work Together
1. Communication Between Functions
Nike: Teams use meetings and collaborative platforms to coordinate. For example, marketing and R&D work together to launch new products, and logistics and sales ensure products are available.
Starbucks: Uses team meetings and integrated systems to keep departments in sync. HR and store operations coordinate on staffing, while finance and purchasing manage costs together.
2. Use of Information Technology
Nike: Uses systems like ERP and CRM to integrate different functions, making operations smoother and helping with decision-making.
Starbucks: Uses technology to collect customer data and manage supply chains, improving efficiency and customer service.
3. External Links
Nike: Works with suppliers, banks, and government agencies to get materials, secure funding, and stay compliant with laws.
Starbucks: Collaborates with coffee farmers, suppliers, logistics partners, and adheres to food safety and labor laws.
Achieving Business Goals
The way these businesses organize their functional areas helps them succeed by:
Efficiency – Streamlined operations reduce costs and improve productivity.
Innovation – R&D and teamwork lead to new and improved products.
Customer Focus – Good customer service and marketing keep customers happy and loyal.
Sustainability – Ethical sourcing and sustainable practices build a good reputation.
