Business aims, objectives, and values A Michelin case study
Page 1: Aims and objectives
Aims and objectives are the 'ends' that an organisation seeks to achieve. It then has to decide the means it will use to achieve those ends, draw up a plan and devise a strategy. Most organisations have general or overall aims which they can break down into specific objectives, or targets.
By setting aims and objectives, companies give themselves a sense of purpose and direction. This provides a framework around which to create their plans. With an overall plan in place, a company can set particular targets and monitor its progress towards reaching them. Targets can vary from a sales target and/or a profits target to a zero-accident target. Having a sense of direction and a coherent, overall plan is particularly important to a global organisation like Michelin, which produces many different product lines worldwide.
One major challenge is to communicate the plan clearly to everyone in a form that they can understand and put into practice. In 2002, the Michelin Group, at the initiative of its Managing Partners, Edouard Michelin and René Zingraff, launched the 'Michelin Performance and Responsibility' approach. Based on the Group's traditional five values, it established a formal framework for the Group's day-to-day activities and responsibilities in all areas: economic, social, environmental and ethical.
Many large organisations set out their overall purpose in the form of a mission statement. Michelin's mission is 'to make a sustainable contribution to progress in the mobility of people and goods by constantly enhancing freedom of movement, safety, efficiency and pleasure when on the move.'
The company intends to achieve this goal through the following means:
constant improvement of its products' technical performance and its tyre-related services' quality
alongside its core activities, development of new technologies or products to support sustainable mobility
ongoing active role both in public debate on future modes of transport and in researching relevant ways of transition towards sustainable mobility
delivering appropriate messages to its customers, enabling them to adopt sound purchasing behaviours and positive attitudes towards road safety and environmental issues.
Any organisation must be based on a sound economic footing in order to achieve its mission. As such, Michelin intends to remain the world No. 1 in tyres and mobility assistance, and to perform well over the long-term.
Having overall aims brings a sense of direction to everything Michelin does. These are then translated into particular objectives and targets for various areas:
markets and customers: sales growth, market shares, product reliability, delivery
employees: safety at work, training, diversity
economic performance: operating margin, free cash flow, return on assets, level of investments
environmental policy: end-of-life tyre recovery, number of sites with a certified environmental management system
production: manufacturing cost per tyre, production capacities, flexibility.
Wherever possible, Michelin expresses its particular objectives or targets in a form that can be easily measured and monitored - that usually means using numbers. For example some of its economic objectives are to achieve:
a 10% operating margin on average over the cycle
a positive free cash flow
an economic performance well above the cost of capital employed.
Michelin intends to achieve these mainly by growing faster than the market in the attractive segments that it has chosen, developing its positions in high-potential regions, reducing overheads and increasing flexibility and productivity.