Wednesday, March 10, 2010
Long Term Objectives
• Long term objectives represent the results expected from pursuing certain strategies.
• Strategies represent the actions to be taken to accomplish long term objectives.
• The time frame for objectives and strategies should be consistent, usually from two to five years.
The Nature of Long Term Objectives:
1. Objectives should be quantitative, measurable, realistic, challenging, hierarchical, obtainable and congruent among organizational units.
2. Each objective should be associated with a time line.
3. Objectives are commonly stated in terms of such as growth in assets, growth in sales, profitability, market share, degree and nature of diversification.
4. Clearly established objectives offer many benefits. They provide direction, allow synergy, aid in evaluation, establish priorities, minimize conflicts and aid in allocation of resources and the job designs.
5. Long term objectives are needed at the corporate, divisional and functional levels of an organization.
6. Without long-term objectives, an organization would drift aimlessly toward some unknown end.
7. It is hard to imagine an organization an organization or individual being successful without clear objectives.
Financial versus Strategic Objectives:
1. Financial objectives:
Financial objectives include those associated with growth in revenue, growth in earning, higher dividends, larger profit margins, greater return on investment, higher earning per share, a rising stock price, improved cash flow, and so on.
2. Strategic objectives:
Strategic objective includes things such as a large market share, quicker on time delivery than rivals, lower costs than rivals, higher quality products than rivals, wider geographic coverage than rivals, achieving ISO certification and so on.
Areas in Which Objectives are Established:
• Market Standing: the position of an organization relative to its competitors
• Innovation: any change made to improve the methods of conducting organizational business.
• Productivity: the level of goods and services produced by an organization.
• Resource levels: the relative amount of resources held by an organization such as inventory, equipment and cash.
• Profitability: the ability of organization revenue dollars beyond the expenses necessary to generate the revenue.
• Manager Performance and Development: the quality of managerial performance and the rate at which managers are developing personally.
• Worker Performance and Attitude: the quality of non-managers performance and such employee’s feeling about their work.
• Social Responsibilities: the obligation of business to help improve the welfare of society while it strives to reach organizational objectives.