Page 50 - DCOM506_DMGT502_STRATEGIC_MANAGEMENT

Strategic Management

Notes Nature of Objectives

The following are the characteristics of objectives:

Hierarchy of Objectives

In a multi – divisional firm, objectives should be established for the overall company as well as
for each division.
Objectives are generally established at the corporate, divisional and functional levels, and as
such, they form a hierarchy. The zenith of the hierarchy is the mission of the organisation. The
objectives at each level contribute to the objectives at the next higher level.

Long-range and Short-range Objectives

Organisations need to establish both long-range and short-range objectives (Long–range means
more than one year, and short–range means one year and less.) Short-range objectives spell out
the near – term results to be achieved. By doing so, they indicate the speed and the level of
performance aimed at each succeeding period. Short – range objectives can be identical to long–
range objectives if an organisation is performing at the targeted long-term level (for example,
20% growth - rate every year). The most important situation where short-range objectives differ
from the long-range objectives occurs when managers cannot reach the long-range target in just
one year, and are trying to elevate organisational performance. Short–range objectives (one –
year goals) are the means for achieving long range objectives. A company that has an objective
of doubling its sales within five years can’t wait until the third or fourth year of its five-year
strategic plan. Short range objectives then serve as stepping-stones or milestones.

Multiplicity of Objectives

Organisations pursue a number of objectives. At every level in the hierarchy, objectives are
likely to be multiple.

Example: The marketing division may have the objective of sales and distribution of
products. This objective can be broken down into a group of objectives for the product,
distribution, research and promotion activities. To describe a single, specific goal of an
organisation is to say very little about it. It turns out that there are several goals involved. This
may be due to the fact that the enterprise has to meet internal as well as external challenges
effectively. Moreover, no single objective can place the organisation on a path of prosperity and
progress in the long run.
However, an organisation should not set too many objectives. If it does, it will lose focus. Too
many objectives have a number of problems.

Examples: (a) They dilute the drive for accomplishment
(b) Minor objectives get highlighted to the detriment of major objectives

There is no agreement to the number of objectives that a manager can effectively handle. But, if
there are so many that none receives adequate attention, the execution of objectives becomes
ineffective; there is a need to be cautious. It will be wise to identify the relative importance of
each objective, in case the list is not manageable.

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