Goals Of Organisations Essay, Research Paper
GOALS OF ORGANISATIONS
Introduction
This report was compiled to inform the staff of Rostel on the theories and concepts of organisational policies and goals.
Contained within are descriptions of the main theories and their applications to Rostel.
Textbooks used in researching this report were:
Personnel Management Practice by Michael Armstrong
Management A Contemporary Approach by Deode Keuning
Corporate Strategy and Business Planning by Roger Bennet
Strategic management
If we consider the fact that we live in a society of organisations and that this is such an integral feature of our lives, it is surprising that we rarely consider what organisations are, their goals and how they are managed.
An organisation (be it a industrial company, private or government controlled firm; large, medium-sized or small company, national or multi-national company, charity, union, political group etc.), is a group of people who work together and co-operate in order to reach a specific set of goals. Organisations by working together can accomplish goals that an individual would be otherwise unable to reach.
The owners/managers of the organisation must decide on what the company s purpose is; its goals and aims, what policies to adopt to achieve these gaols and the resources available to do so. The planning of these strategies is known as strategic management. G A Cole in his book Strategic Management defines it as follows:
Strategic Management is a process, directed by top management, to determine the fundamental aims or goals of the organisation and ensure a range of decisions which will allow for the achievement of those aims or goals in the long-term, whilst providing for adaptive responses in the shorter term
Mission Statement
A company must have a clear statement of its objectives and areas of activity that will provide the vision and direction for it to operate over the next several years. This mission statement of the company must ask the following questions:
What do we want to be?
What is our business? What will our business be?
Who are our customers? One which customer groups do we want to focus?
In which way do we want to offer a distinguishing and lasting value to our customer?
The questions may seem straightforward, but the answers must be well thought out and considered, as it will have a huge influence on the plans and operations of the company.
Rostel Fragrances mission statement declares that the company wants to be influential in the promotion of beauty and health products and create a climate of healthy living through the use of beauty care; fragrances and cosmetics, vitamins and other health products. More recently Rostel is considering expanding into the health and leisure centre market, a move consistent with Rostel s overall mission.
The customer groups that Rostel have decided to focus on are young people (the under 30 s); not only do young people have more disposable income to spend but they are the customers of the future, and the over 50 s. This group of consumers is living longer and is becoming, in general, wealthier and more health conscious. Rostel has also stated its aims to make their products more appealing to men, a group previously largely ignored by the fragrance and cosmetic market. While the above mentioned groups are the focus of Rostel s products the mission statement also declares that its products should appeal to the widest variety of customers as possible, as to exclude any group from its marketing plans would be disadvantageous.
Rostel has decided that to distinguish its products from its competitors, they would produce the highest quality products made using cruelty free processes and which would in some way reflect the locale i.e. there would be a strong Scottish and Caithness in particular, theme in the products. Rostel have felt that using cruelty free and environmentally friendly products are the way of the future and that any company not doing so will be felt behind.
Strategic Plans
For a company to set in motion the mission that it has chosen it must formulate a strategic plan. A strategic plan can be defined as a broad program for defining an organisation s objectives. It creates a guideline for decision making and channels the organisation s member s thinking so that it is consistent with the objectives. In simpler terms the strategic plan embraces the overall mission statement and formulates them into a series of aims and goals that the organisation can implement. In essence it answers the question of how do we do that?
Rostel has answered the question of how it accomplishes its mission statement of promoting healthy living by producing a range of cosmetics, fragrances, vitamins and health care products designed for customer groups, such as the elderly and the young wage earners. The company has also targeted new groups such as men who not normally considered as potential customers for fragrances and cosmetic products. However the company has not forgotten that it still must attempt to appeal to a more widespread market not confining itself to niche markets alone.
Tactical Plans
The tactical or operational plan states the methods and resources that will be needed if the company s goals and strategic plans are to be implemented. This describes the objectives that need to be obtained, the measurements for obtaining these objectives, the allocation of personnel and resources required and finally they state in which time span the set objectives will have to be obtained.
Each functional area and department of the company will be given an action plan that will set out a specific objective or target, which is both achievable and realistic in terms of resources, capabilities and time. It will also detail how the progress and eventual success or failure of the plan will be measured. This tactical plan gives the department a clear objective to follow, outlining the critical core tasks that must be achieved and the management systems used to fulfil them.
Rostel has set its departments several operational plans based on the overall strategic plan envisioned for the company. One of the present plans concerns the Christmas gift market. Marketing has predicted that there will be increased demand for Rostel products, especially fragrances as gifts. Due to recent publicity and an effective advertising campaign the Christmas sales of fragrances are expected to almost double. The result is an operational plan to increase the production and distribution of fragrances.
The Fragrance Production Department has had to increase it production twofold. There is now a night shift in operation, which has involved the temporary transfer of employees from other production lines to achieve this level of production. Management has had to work out new employee rotas, working hours and reward schemes.
More raw materials have been ordered from suppliers and due to a cash flow crisis resources have had to be diverted from the other production lines. Management has had to develop a new structure and management system to plan and control the increased production. Above all there is a definite time scale that must be adhered too.
The Distribution Department has had to hire temporary staff and vehicles to get the products into the shops in time for the Christmas market whilst at the same time trying to keep its costs down.
All the departments within Rostel each have their own operational plans detailing the personnel, resources and management systems necessary to meet the Christmas rush for Rostel s fragrances.
Goals and policies
A company will usually state in its strategic plans one or several goals which gives the employees a focus for and direction for their work. These goals provide the framework in which employees can operate knowing that they are working towards the company s overall plans and mission. A company can have different goals for each department depending on its function.
There are four general types of goals:
Consumer Goals in general the company puts the customer first. Customer satisfaction is paramount, the company concentrating on customer service and the methods necessary to achieve this. The employees of the company know that their primary role is in providing the customer with a good service.
Product Goals the company concentrates on the product (or a service); to produce the highest quality or best value or just the cheapest product. This may also be another aspect such as distribution, packaging, marketing, etc. The company concentrates on those aspects of producing the product, the product itself and getting the product to the marketplace.
Operational Goals are of a more tactical nature in that they set out the specific targets to be achieved. This may be production targets (level of production), customer service targets (number of satisfied customers etc.) or for instance, in the case of distribution, delivery times.
Secondary Goals are stepping-stones on the way to achieving a primary or main goal. For example, a company s primary goal may be to achieve one hundred per cent customer satisfaction and it has set several secondary goals to achieve this. The company has secondary goals of having all its employees trained in customer care, product knowledge and empowerment to make their own on-the-spot decisions concerning the customer. When the company has achieved these secondary goals it will know that it is well on the way to fulfilling its primary goal of customer satisfaction.
Rostel Fragrances Ltd has an overall product goal, that is to produce the highest quality fragrances, cosmetics and health care products on the market. However the departments within the company each have different, more specific goals. The production department has several operational goals depending on the actual production line. In general this sets out not only the output targets, but also the quality standards and levels of rejects acceptable. The distribution department an operational goal that details delivery times and targets.
In contrast the Retail Outlets have a consumer goal in mind in their operations, as they are very much concerned with customer service and the image of the company rather than volume of sales.
The Sales Department has operational goals with set sales targets to reach per month. They also have secondary goals in that they have to achieve set targets in obtaining new business and increasing sales in existing customers, both of which if achieved will go a long way to fulfilling their primary operational goal.
The external environment
When a company sets out its mission statement and formulates its strategic and operational plans, it must take into account the fact that the company must operate in the real world and that there are a multitude of factors that can be an influence on the company and its plans.
A successful company must be able to predict and recognise the constant state of change in the environment and have a strategic plan that not only takes this into account, but also be flexible enough to react to any change quickly enough to take advantage before its competitors. A company which ignores the outside world and its changing circumstances and attitudes will not survive for very long.
In considering its plans a company should consider the influences that can affect it. This is known as a PEST analysis, which identifies four areas of effect on an organisation. They are the:
Political environment
Economic environment
Sociological environment
Technological environment
The Political Environment
A company must follow the legislation as set down by the government. Legislation exists to:
Protect the consumers from business. Examples such as the Consumer Protection Act 1987, the Trade Descriptions Act and the General Product Safety Regulations 1994 set out the regulations and standards that companies must adhere to in dealing with consumers.
Protect society as a whole from business. Legislation such as the Fair Trading Act 1873, the Companies Act 1989 and the Competition Commission impose limitations and regulations on the manner in which companies can operate.
Protect Companies from each other. As well as the legislation mentioned above, the Patent Office through Patents, Trademarks and the Copyright Act 1999 protects a company s intellectual property (this includes such things as a company s innovations, trading secrets etc).
Legislation also includes self-regulatory bodies such as the Advertising Standards Authority, The British Association of Travel Agents and the Association of British Healthcare Industries all of who have their own standards which member companies must follow.
The Economic Environment
A company must take into account a multitude of economic factors such as changes in consumer income, the present and future interest rates, taxes, inflation, exchange rates, costs of production and the general feel good factor ; the country may be in a recession or coming out of one. The company should look at the effect this will have on their short and long-term plans and adjust them as necessary.
Companies must also look at the global economic environment regardless of whether they export or import, as this will have an affect on there operations in some way. For example, within the next 30 years East Asian countries will increase their share of world production from 15 to 25 per cent. British companies must take account of this, and what it will mean to their long-term strategies. In the short-term bad harvests, the political and economic situation in other counties, international competition and many other factors that exist all can affect the operations and plans of a company.
The Sociological Environment
The sociological factors can be divided into the demographic and cultural factors. However it is important to appreciate that they cannot be so readily separated.
In considering the demographic factors a company should look at the growth, size and composition of the population. Changes in these factors will have an affect on a company s future plans.
Taking the growth in the population as an example, a decrease in the birth rate, for example, will not only mean that there will be less potential consumers, but this will have a more immediate effect on baby food producers such Nestl . For employers this means that there will be less labour available in the future.
The increasing age of the population and lowering of the retirement age will mean a great deal for companies in healthcare and medicine, the leisure industry and financial services; especially insurance and pension companies who will have to pay more pensions and for longer.
The composition, spending power and general trends of the various age groups are of prime importance. The fact that there is a trend for people to move out of larger cities into smaller towns is important for store-chains in that they can follow the consumers and maintain their market share. Identifying those groups with surplus income, such as wage earners in their early twenties with few commitments such as families and mortgages, or the retired provide potential marketing opportunities. Analysing the size of a group and their buying habits is vital to determine if there is a large enough market to be viable.
The cultural factors are of equal importance to a company as the changing attitudes, values and concerns of the population can have a profound affect. Recent trends such as individualisation, assertiveness and consumerism; concern for health and the environment; decrease in the total number of working years; a desire for more comfort; increased role and importance of women in the labour market; redistribution of social roles between couples; safe sex; higher levels of education resulting in fewer people being prepared to undertake unskilled labour and an increasing bias to employ younger people are just some of the factors that a company must take into consideration when formulating its strategy.
The Technological Environment
An essential feature of the twentieth century has been technological progress. Some would argue there has been a new industrial revolution, which has left few industries unaffected.
These changes in technology have resulted in two important consequences for industry, that is the modification of production processes and the development of innovative new products which affect a company both with its own business and other related businesses.
In general, new technology, automation in particular, has resulted in increased production with reduced labour costs. The development of the microchip and consequent computerisation has led to the explosion in the Communications industry. The down side can be seen in the increasing downsizing of organisations and a rise in the unemployment figures. The printing industry for example, has suffered due to the fact that even the smallest one-man business can now, with a simple PC produce its own brochures, leaflets, labels and stationary.
Rostel Fragrances in formulating its strategic plans must look at the present legislation and how it will affect its operations. The company must ensure that all its products are within the standards as set by the Cosmetic Products (Safety) Regulations and that in labelling and retailing the products they observe the Trade Descriptions Act. For example the fragrance Bloom of Heather does indeed have extracts or the essence of heather contained within. As a member of the Cosmetic, Toiletry and Perfumery Association, Rostel must also apply the standards as set by the Association to their products.