An organization’s mission gives a framework or direction to a firm.
An organization’s mission gives a framework or
direction to a firm. The next step in planning is focusing on estab-lishing
progressively more specific organizational direction by setting objectives. An
organizational objective is a target toward which the organization directs its
efforts. Objectives in organizations, as shown in Figure 3.3 exhibit a
The BOD are more concerned with mission, purpose
and overall objectives. Middle managers are involved in key result areas(KRAs),
division and department objectives. At the lower level, group personal objectives are set. The objectives can be top down or bottom up taking the initiative from lower management.
Managers should develop organizational objectives that are
2. Require a desirable level of effort
4. Measurable and operational
5. Consistent in the long and short run
Peter Drucker, perhaps the most influential business writer of modern times, has pointed out that it is a mistake to manage organizations by focusing primarily on one and only one objective. According to Drucker, organizations should aim at achieving several objectives instead of just one. Enough objectives should be set so that all areas important to the operation of the firm are covered. Eight key areas in which organizational objectives should normally be set are:
Market standing: The position of an organization – where it stands – relative to its competitors
Innovation: Any change made to improve methods of conducting organizational business.
Productivity: The level of goods or services produced by an organization relative to the resources used in the production process. Organizations that use fewer resources to produce a specified level of products are said to be more ‘productive than organizations that require more resources to produce at the same level.
Resource levels: the relative amounts of various resources held by an organization, such as inventory, equipment, and cash. Most organizations should set objectives indicating the relative amount of each of these assets that should be held.
Profitability: The ability of an organization to earn revenue dollars beyond the expenses necessary to generate the revenue. Organizations commonly have objectives indicating the level of profitability they seek.
Manager performance and development: The quality of managerial performance and the rate at which managers are developing personally. Because
both of these areas are critical to the long-term success of an organization,
emphasizing them by establishing and striving to reach related organizational
objectives is very important. Worker
performance and attitude: The quality of non-management performance and such employee’s feelings about their work. These
areas are also crucial to long-term organizational success. The importance of
these considerations should be stressed through the establishment of organizational
responsibility: The obligation of business to help improve the welfare of society while it strives to
reach organizational objectives. Table 3.1
shows the usage of the different objectives by various companies.
*Adds to more than 100 percent because most
companies have more than one goal
Source : Y.K.
Shetty, New Look at Corporate Goals,” California Manage-ment Review, 22 , No.2
Tags : Strategic Management - Concept Of Corporate Strategy
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