Page 48 - DCOM506_DMGT502_STRATEGIC_MANAGEMENT

Strategic Management

Notes

Notes The distinction between goals and objectives is summarized below:
Goals Objectives
1. General Specific
2. Qualitative Quantative, measurable
3. Broad organization–wide target Narrow targets set by operating divisions
4. Long term results Immediate, short term results

Some writers, however, have reversed the usage, referring to objectives as the desired long-
term results and goals as the desired short-term results. And still others use the terms
interchangeably, meaning one and the same. These authors view that, little is gained from
semantic distinctions between goals and objectives. The important thing is to recognize that the
results an enterprise seeks to achieve vary as to both scope and time-frame. To avoid confusion,
it is better to use the single term “objectives” to refer to the performance targets and results an
organisation seeks to attain. We can use the adjectives long-term (long-range) and short-term (short-
range) to identify the relevant time-frame, and try to describe their intended scope and level in
the organisation, by using expressions like broad objectives, functional objectives, corporate
objectives etc
Some of the areas in which a company might establish its goals and objectives are:
1. Profitability (net profit)
2. Efficiency (low costs, etc)

3. Growth (increase in sales etc)
4. Shareholder wealth (dividends etc)
5. Utilization of resources (return on investment)
6. Market leadership (market share etc)

Stated vs. Operational Goals

Operational goals are the real goals of an organisation. Stated goals are the official goals of an
organisation. Operational goals tell us what the organisation is trying to do, irrespective of
what the official goals say the aims are. Official goals generally reflect the basic philosophy of
the company and are expressed in abstract terminology, for example, ‘sufficient profit’, ‘market
leadership’ etc. According to Charles Perrow, the following are the important operational goals:

1. Environmental Goals: An organisation should be responsive to the broader concerns of
the communities in which it operates, and should have goals that satisfy people in the
external environment. For example, goals like customer satisfaction and social
responsibility may be important environmental goals.
2. Output Goals: Output goals are related to the identification of customer needs. Issues like
what markets should we serve, which product lines should be followed, etc. are examples
of output goals.

3. System Goals: These goals relate to the maintenance of the organisation itself. Goals like
growth, profitability, stability etc. are examples.
4. Product Goals: These goals relate to the nature of products delivered to customers. They
define quantity, quality, variety, innovativeness of products.

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