ORGANIZATIONAL

OBJECTIVES

by

Dr. Makarand Joshi

 Organizational Objectives
The nature, role and importance of objectives.

The hierarchy of objectives

Mission statements
Aims
Strategic objectives
Operational objectives

Business Plans
SWOT
 Context
• The annual report for Cadbury Schweppes for 1998 stated that there
were 8,374 employees. As they arrive to work each day, the employees
know their jobs and how to do it. This is because each of the employee
has a clearly defined job description which has been carefully written to
ensure that the job is done in an appropriate manner.

• This situation has not been achieved by accident; on the contrary,

careful attention has been given to the needs of the business in order
for it to operate successfully. Each department will have certain
requirements to fulfill which will have been generated from the
company objectives which clearly state what the business is hoping to
achieve both in the short and long term.

• If Cadbury’s did not have any objectives, there would be nothing for the
company to work towards. The objectives determine the role of the
employees within the business.
 Context
• On occasions when the business is faced
with a difficult decision, reference to its
objectives will help in the decision
making process.
• Objectives provide a sense of direction
for the business and its employees; the
objectives can be assessed by reference to
targets which in turn can be measured.
 YOUR REACTION

All aspects of human activity are made

clearer and more focused if there is a
distinct objective to aim for. An aim helps
to direct and control activities. In addition,
for any aim to be successfully achieved,
there has to be an appropriate strategy – or
detailed plan of action – in place to ensure
that resources are correctly directed
towards the final goal’.
 The Nature of Objectives
Objectives are the goals of the business. They represent the outcomes or
targets that the business wants to gain in order to achieve its aims.

The objectives of a business are derived from its aims.

Well defined objectives are important. They will help the business to be clear
about what it wants to achieve. The performance of a business could be
assessed by how effectively it achieves its objectives.

Characteristics of business objectives

Businesses must have objectives which are SMART

• Specific – stating exactly what it is trying to achieve.
• Measurable – able to be measured to decide if they have been achieved.
• Agreed – have the approval and understanding of everyone involved.
• Realistic – able to be achieved by the business taking into account its
resources, competition, market, etc.
• Time Specific – state a time by which they should be achieved.
Factors Which Determine the corporate objectives of
a business

• The size and status of the business.

• The power of stakeholders.
• Ownership.
• Long and short-term objectives.
• External and internal pressures.
• Risks
• Corporate and business culture.
• Number of years the business has been operating.
 The Importance of Objectives
Objectives are important in order to

Determine strategy
Provide a guide to action
Provide a sense of direction and units
Provide a framework for decision making
Coordinate activities
Facilitate prioritization and resolve conflicts between departments.
Measure and control performance
Encourage a concentration of long – term factors
Motivate employees
Provide a basis for decision making.
Provide shareholders with a clear idea of the business in which they
have invested.
 THE HIERARCHY OF OBJECTIVES

The business over all purpose. The long-term

goals which a business hopes to achieve. No
two companies will have the same corporate
aims.
AIMS

A statement of the business’s core aims, phrased in a

way to motivate employees and to stimulate interest
by outside groups. Its an attempt to condense the
MISSION purpose of the business’s existence into one
statement.

These are the goals of the business. They

are the outcomes or targets the business
want to gain in order to achieve its aims. The
CORPORATE OBJECTIVES objective of a business can be derived from
its aims

Specific targets for separate

divisions.
DIVISIONAL OBJECTIVES

Targets for each

DEPARTMENTAL OBJECTIVES department

Individual
goals/targets
INDIVIDUAL TARGETS
THE HIERARCHY OF OBJECTIVES

TO MAXIMISE SHAREHOLDERS VALUE

AIMS

TO INCREASE PROFITS OFF ALL DIVISIONS BY

10% PER YEAR
CORPORATE OBJECTIVES

WITHIN ONE REGION, TO INCREASE

MARKET SHARE BY 10% AND CUT
DIVISIONAL OBJECTIVES OVERHEADS BY 5%

MARKETING: Increase Profits by

10%; FINANCE : Reduce Long-
DEPARTMENTAL OBJECTIVES term borrowing by 5%; R&D:
Develop one innovative product
each year.

E.G IN THE MARKETING

DEPARTMENT
•Increase Sales by an average of
INDIVIDUAL TARGETS 5% per client.
•Introduce five more clients to
the business each year.
 A case of Corporate Aims
‘A Mini Glaxo by 2010’

• Vijay Patel is a self-made millionaire. He is the founder and chairman of

Waymade Health Care, a drugs company.

• Although he has achieved considerable wealth already he is not ready to

give up: “I’ve got a long way to go. It isn't about making more wealth. It’s
about achieving the goals I have set for my business. My ambition to
become a mini Glaxo by 2015’.

• (Glaxo is one of the world’s leading pharmaceutical companies)

• This case demonstrate a typical corporate aim. Vijay Patel tells us that he
wants the business to remain in the same industry but to develop and grow
to achieve the same degree of recognition, albeit, on a different scale to
one of the market leaders.
 Corporate Aims

• Concentrate on Business Development and Growth.

• Concentrate on customer based goals – such as meeting customers’

needs.

• Concentrate on Shareholders- based goals – such as ‘increasing value

for our shareholders’.

• Corporate aims are all embracing – they are designed to provide

guidance to the whole organization and not just part of it.

• Corporate aims are statements of goals, not strategies as they give no

indication of how these aims might be reached.
 What Benefits Flow From Establishing Corporate
Aims?

• They become the starting point for the entire set of objectives on
which effective management is based.

• They can help develop a sense of purpose and direction for the whole
organization if they are clearly and unambiguously communicated to
the workforce.

• They allow an assessment to be made, at a later date, of how successful

the business has been in attaining these goals.

• They provide the framework within which the strategies or plans of

the business can be drawn up.
 Unilever Corporate Purpose
• Our purpose in Unilever is to meet the everyday needs of people every
where – to anticipate the aspirations of our consumers and to respond
creatively and competitively with branded products and services which
raise the quality of life.

• Our deep roots in local cultures and markets around the world are our
unparalleled inheritance and the foundation for our future growth. We will
bring our wealth of knowledge and international expertise to the service of
local consumers – a truly multi-local multinational.

• Our long-term success requires a total commitment to exceptional

standards of performance and productivity, to working together effectively
and to a willingness to embrace new ideas and learn continuously.

• We believe that to succeed require the highest standards of corporate

behavior towards our employees, consumers and the societies and world in
which we live.
• This is Unilever’s road to sustainable, profitable growth for our business
and long-term value creation for our shareholders and employees.
 Corporate Objectives

• The aim and mission statement of the business share the

same problem; they lack specific details for operational
decisions and they are rarely expressed in qualitative
terms. They need to be tuned into goals or targets which
are quite specific to each business and which themselves,
can be broken down into specific departmental targets.

• Corporate Objectives are designed to do just this. They are

based on the central aim of the business but they are
expressed in terms that provide a much clearer guide for
management action or strategy.
 CORPORATE OBJECTIVES

These are the outcomes or targets the business wants to gain in order to achieve its objectives:

Survival, Profit, Image, Reputation, Social Responsibility

Growth , Market share, Core Activities

Sales Revenue, Shareholder Value,

STRATEGIC OBJECTIVES

This relates to the organisation’s responses to major change or improvement, competitiveness or

social issues, and business advantages.

They are generally focused internally and externally and relate to significant customer,
market, product, service or technological opportunities and challenges.

They are what the organisation must achieve to remain or become competitive and ensure its
long – term sustainability. It sets the organisation’s long – term directions and guide resource
allocation and redistribution.

Examples: Strategic Objectives

A bigger market share.
Quicker design-to-market times than rivals.
Higher product quality than rivals.
Better customer service than rivals
Recognition as a leader in technology
 Tactical Objectives

These objectives are less far reaching than strategic objectives. They are short term
departmental performance targets .

For example, A company may have a corporate objective of becoming a global operator in ten
years, getting established in Europe within one year may be a tactical objective.

Operational Objectives

These are low level objectives which are addressed to small groups and individuals. They
carry little risk, require less planning and can be achieved fairly quickly. For example,
completing a customer order by the end of the day might be an operational objective.

Signing up ten new dealers by the end of the month is another operational objective

1. You are the CEO of a company which produces a special line of gents clothing and you are
seeking a bigger market share for your products.
Using the SMART acronym, establish your Corporate, Strategic, Tactical and Operational
objectives.
2. What possible corporate objective your business can have with regard to the following groups of
stakeholders?
Customers; Suppliers; Employees
 The Main Issues relating to objectives

• They must be based on the corporate aims.

• They should be achievable and measurable if they are to

motivate people.

• They need to communicate to employees and investors in

the business.

• They will form the framework of more specific

departmental or strategic objectives.

• They should indicate a time scale for their achievement.

 Conclusion
Once corporate objectives have been
established they need to be broken down into
specific targets for separate divisions,
departments and ultimately individuals.
Corporate objectives relate to the whole
organisation.
They cannot be used by each division of the
business to create strategies for action until
they are broken down into meaningful targets
focusing on divisional goals.
These divisional objectives must be set by
senior management.
Thank You!!!