Apply IB Business Management SL objectives to decisions about vision, mission, growth, profit, stakeholder interests and corporate social responsibility.
Reading enables all People (RP)
R P is a non-profit and non-governmental organization (NGO) that teaches reading to financially disadvantaged children and teenagers. RP's mission statement is: "To educate those in need in order to foster social inclusion and change".
R P has 64 paid full-time staff and 350 part-time volunteers, mostly college students, who work in all areas of the city where R P is located. Volunteers do not work under contract. R P is experiencing communication problems. One young volunteer complained, "I often receive contradictory information. One person says one thing and another says something else". R P 's organizational structure is tall. There are several formal methods of communication present at R P, but most of the information passes through informal communication channels.
R P is planning to extend its literacy program to rural areas. The program will last five years. R P 's current sources of finance are insufficient to fund the new program. At present, R P is only financed by national businesses. Alice Lire, R P 's Chief Executive Officer (CEO), has contacted the government for financial support. However, the state budget is limited and chances of government cooperation are low.
As part of its corporate social responsibility policy, McMikey, a multinational company that markets products to children, is willing to pay for the books for the program for two years. Alice is ready to accept the offer, but she would prefer McMikey to guarantee its support for five years. However, there is internal disagreement at McMikey. The Finance Manager believes that it would be too costly. However, the Marketing Manager argues that McMikey's brand image would be improved by a longterm association with R P 's literacy program.
Define the term mission statement.
Explain one advantage and one disadvantage for McMikey of having a corporate social responsibility policy.
Klar
Klar is a factory that bottles mineral water for use in large water dispensers. The factory is located on a hill next to a spring from where water flows naturally. Klar uses a flow production method with a production capacity of 35 million litres per year. Klar has a 60 % share of the national market and also exports bottled mineral water to several countries.
A multinational company called Kaiser is interested in acquiring Klar. "If the acquisition takes place, we will expand Klar's production to gain economies of scale; we will also add a new range of flavoured drinks that will be produced in batches and sold in 1.5 litre bottles. Our maximum production capacity of flavoured drinks will be 3 million bottles a year," says Roman Hitschfeld, Kaiser's Production Manager.
The forecast costs for producing Klar's new flavoured drinks are as follows:
- variable cost per bottle:
- estimated sales price per bottle:
- fixed costs: .
Klar is facing fierce competition from other companies that use plastic bottles and offer lower prices to consumers. Although the cost of glass bottles is higher than plastic ones, up until now Klar has only used re-useable glass bottles to support its ethical objectives of being environmentally-friendly. Now, Klar is considering switching from re-useable glass bottles to non re-useable plastic ones. The environmental pressure group Plastic No More! is campaigning against the use of plastic. A spokesperson from Plastic No More! said: "there is a growing trend among consumers to purchase products that will not damage the environment, but we are still a minority".
Analyse one advantage and one disadvantage for Klar of having ethical objectives.
SGS
SGS operates a worldwide delivery business. SGS's aim is to deliver all packages on time, at low prices, anywhere in the world. Its Chief Executive Officer (CEO) Jean-Paul Lominé is known even by customers as an autocratic leader. Twice a year he sets prices and targets for costs and customer satisfaction.
S G S has three main competitors, Company A, B and C.
Primary market research revealed that customers value delivery on time, but many would pay higher prices for a more environmentally friendly service. It also showed that customers did not know whether SGS followed socially responsible "green" (environmentally friendly) practices. Customers also believed that the company's current autocratic leadership style did not fit with "green" practices.
Jean-Paul decided to change his leadership style from autocratic to situational*. He wrote a new aim for S G S : to make it the world's greenest delivery company. He ordered the Operations Department to recommend possible strategies. The Operations Department suggested two:
- purchase new, energy-efficient airplanes
- adopt new software to set fuel-saving air routes.
The Finance Department calculated that purchasing new airplanes would be a significant cost resulting in higher prices to customers. Tactically SGS would purchase a new airplane each time an existing airplane required significant expenditure to keep it flying. Adopting new software would require major computer upgrades, but the cost of the investment would be quickly recovered from fuel savings. The Marketing Director reported to Jean-Paul that if customers did not realize that SGS was now more environmentally friendly, they might think that it had only increased prices. Jean-Paul, however, refused to listen to the Marketing Director.
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* situational: style of leadership that is also called situation leadership
}
Discuss the interrelationships between S G S 's aims, strategies and tactics.