Strategic Business Objectives and Value Chain Management

Strategic Company Objectives

General Objectives: The hierarchical level of the company, or its rationale as an economic unit, defines the general objectives. These are set for the long term and serve as the starting point for business performance.

Specific Objectives: These are goals properly scheduled for a specific period, such as a change in the plant, without losing sight of the company's ultimate end goal.

The company seeks to maximize profits by reducing costs, though conflicts may arise between leadership and the company's broader needs.

Departmental Sub-objectives

The company is divided into departments, each having different objectives. The overall purpose is better served if each department fulfills the general goal.

Managing Conflict of Objectives

A company is composed of various elements, the most important being people. When setting goals, there must be an agreement and a search for equilibrium because each individual wants to enhance their own interests. Consequently, conflicts arise because priorities differ among stakeholders:

• Shareholders: They desire maximum performance and high returns.
• Professional Managers: They aim for effective management to demonstrate their capabilities.
• Employees: They want to work under good conditions but may feel they receive too little in exchange, while the employer wants high productivity at a lower cost.
• Customers: They want the company to comply with agreed delivery dates and product quality.
• Banking Entities: They want the assurance that loans will be returned.
• Suppliers: They try to collect payments within the agreed deadlines.

Optimizing the Value Chain

Another objective for increasing competitiveness is to optimize the value chain. Value chain analysis involves separating the business into parts to increase value through activities that enhance products (such as marketing pamphlets). The goal is to achieve maximum profitability in each part by extracting superfluous tasks. A well-managed business becomes less costly and differentiates itself from the competition.

Value Chain Components

We can distinguish three basic components:

• Basic Activities: These relate to production, consumption, and distribution.
• Support Activities: These include administration, Human Resources, and organizational tasks like accounting.
• Margin: This is the difference between the actual value and total costs. This margin helps the company identify which activities are profitable.

Core Elements of a Business

• Human Factors: Individuals with a direct relationship to the company, such as employees and shareholders.
• Material Factors: Economic goods representing the company's capital. This includes fixed capital (such as machinery) and circulating capital (items that change with each activity, like pens).
• Organization: The systems of authority, coordination, and communication within the human group.
• Environment: All external factors that affect the performance of the entrepreneur and the company.