Objectives of the organization

From CEOpedia | Management online

Objectives of the organization (business goals) are stated by management before any planning or decision making activities. Every organization is structured using all available resources in order to achieve objectives set by managers. They are an expression of associations and feedback with the environment. Objectives have a strong influence on the interaction with the environment. Environment affects the determination of the organization's objectives. Objectives should satisfy all the participants of the organization.

Example of Objectives of the organization

The objectives of the organization are to ensure that the organization is properly run and managed in order to achieve its long-term goals. Specifically, these objectives include maximizing profits, enhancing customer satisfaction, increasing market share, improving operational efficiency, and developing new products and services. By actively pursuing these objectives, the organization can ensure that it is well-positioned to achieve its long-term goals and objectives. For example, maximizing profits requires optimizing the organization's financial performance, enhancing customer satisfaction requires providing quality products and services that meet customer needs, increasing market share requires growing the customer base, improving operational efficiency requires identifying and implementing process and procedures, and developing new products and services requires continuously innovating and developing new products and services.

When to use Objectives of the organization

Objectives of the organization should be used to help guide decision-making in the organization. They should be used to inform the organization's strategic planning process and to ensure that the organization is taking the necessary steps to achieve its long-term goals and objectives. Additionally, objectives of the organization can also be used to measure the success of the organization's performance and to identify areas for improvement.

Types of Objectives of the organization

Organizations have a variety of objectives that they strive to achieve. These objectives can be divided into four distinct categories: financial, customer, market, and operational.

  • Financial objectives focus on the organization's financial performance, including maximizing profits, controlling costs, and optimizing cash flows.
  • Customer objectives focus on enhancing customer satisfaction by providing quality products and services that meet customer needs and expectations.
  • Market objectives focus on increasing market share and expanding the organization's presence in its respective markets.
  • Operational objectives focus on improving operational efficiency by streamlining processes, improving productivity, and reducing waste.

By pursuing these objectives, the organization can ensure that it is well-positioned to achieve its long-term goals and objectives.

Role of managers in stating organizational goals and objectives

Managers determine the basic objectives of the organization (one single direction of the organization), promote proper planning, they are a source of motivation for the members of the organization, provide an effective mechanism for monitoring and evaluation (provide a basis for the formulation of standards).

The objectives of the organization results from managers needs. The role of the manager is to identify priorities and concretization of goals. Objectives must be: Specific, Measurable, Ambitious, Realistic, Timely (SMART)

Every organization strives to achieve multiple objectives simultaneously, which form the so-called: targets beam. Size of targets beam, its composition and structure are dependent on many factors, but mainly from the object and mission of the organization that it has to fulfil for the participants and the environment.

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Basic business objectives

The most important goal for organizations is to maximize profit, which is the desired surplus value of goods and services sold over the cost of their manufacture. The amount of the surplus depends mainly on the number of sold goods and services, the prices obtained for them, and the level of labour productivity and production costs. Linked to this is another objective of the organization - efficiency ratio. Efficiency ratio is calculated as the ratio of the benefits achieved as a result of specific actions to their costs. Improving this ratio allows for a surplus of economic organization. Some of the resulting surplus is allocated in the organization development, social funds, bonuses, dividends and wage increases. In this area the most important management choices are made between the current and future needs, which determine the future actions of the organization.

Organizational objectives

In addition to the economic objectives of an organization, there are many production, marketing and social objectives. Objectives for production and marketing are formulated in terms of values and qualities, needed to achieve the desired sales volume of certain services and goods.

Social objectives determine the work conditions and labour relations within the organization. They provide the desired degree of satisfaction of psychosocial and socio-political needs of employees, and participation in the exercise of power in the organization. In this group we can distinguish the objectives of the organization impact on the region and its activity in areas of the socio-economic, municipal and environmental protection.

If an organization is to preserve the social and economic balance managers must bear in mind that the economic, production, marketing and social objectives should be implemented in parallel. If the balance resulting from external and internal conditions would be disrupted managers should determine hierarchy of objectives that will help to restore the balance.

Dependence of organization type and objectives of business

Nonprofit organizations have different structure of targets beam. Drawing its funds from public budgets, organizations are referred to as the budget organizations.They last and grow thanks to a constant game of resources, carried out with the administrators of these funds, convincing them of their social mission, the importance of actions taken, the fatal consequences that occur when you do not properly fulfil their social responsibilities.

Organizations seek primarily for survival and development, as evidenced by the countless cases of companies, which change its business operations, production profile, the form of action, and sometimes even the basic function for which they were created.

Only such an organization that knows how to discover and pursue its goals will be fit to meet its external functions and implement the public interest in a democratic state with market economy.

Types of objectives and goal setting activities

Goals on different levels of management

Objective time-frame

  • Long-term goal - Includes the time horizon of more than 5 years
  • Medium-term goal - This includes the time horizon of one to five years
  • Short-term goal - Includes the time horizon of up to one year

Key areas of activity

  • Market goals - Objectives related to the activity of the organization in the market, such as increased market share, entering new markets
  • Effectiveness objectives - Objectives related to the economic sphere of the organization, such as an increase in profit, the rate of profit from equity
  • Financial goals - Objectives relating to the creditworthiness, cash flows, liquidity of assets
  • Welfare goals - The objectives regarding organization's employees welfare
  • Prestigious and environmental goals - Objectives related to public relations and social responsibility

The degree of compliance between individual and group objectives

  • Postulated objectives - Official declared objectives, the assumptions set out during creation of organization, public statements, reports
  • Realistic goals - Operational objectives resulting from negotiations between stakeholders in the organization

Range on the relationship between objective and the business environment

  • Safety goals - Meeting the needs of the environment and the expectations of the participants outside and inside organization
  • Profit goal - The objective of generating profits at a satisfactory level
  • Growth and development - Objective focused on future organization position and results.

Steps of setting objectives of the organization

In order to achieve the objectives of the organization, certain steps should be taken. These steps include:

  • Identifying the objectives: The first step is to clearly define the objectives of the organization. This includes defining the goals, tasks, and activities that the organization should focus on in order to achieve its objectives.
  • Setting measurable goals and objectives: Once the objectives have been identified, the organization should then set measurable goals and objectives that will guide the organization in achieving its objectives.
  • Establishing KPIs: The organization should then establish Key Performance Indicators (KPIs) that will help measure the organization's progress towards achieving its objectives.
  • Allocating resources: The organization should then allocate resources such as personnel, time, and money in order to ensure that the objectives are achieved within the established timeframe.
  • Implementing the plan: The final step is to implement the plan developed to achieve the objectives. This includes ensuring that the plan is adhered to and that any changes or adjustments are made in a timely manner.

Advantages of Objectives of the organization

Objectives of the organization help to provide a clear direction and purpose for the organization, as well as a set of benchmarks to measure the organization's performance against. Additionally, by setting objectives, the organization can ensure that its resources are being used effectively, as well as identify areas of improvement that require further investment. Furthermore, objectives of the organization can also help to motivate the organization's employees, as they have a clear understanding of their role and what is expected of them. Finally, objectives of the organization can also help to create a sense of unity within the organization, as everyone is united by a common goal.

Limitations of Objectives of the organization

When setting objectives, organizations must be mindful of the limitations of their objectives, as they are subject to a variety of external and internal factors. Some of the common limitations of objectives include:

  • Time: Objectives must be set with a specific timeline in mind, as goals which take too long to achieve may become outdated and irrelevant.
  • Resources: Objectives must be realistic and achievable in the context of the available resources.
  • Complexity: Objectives must be simple and straightforward enough that they are easy to understand and measure.
  • Relevance: Objectives must be relevant to the organization and its mission and must align with its long-term goals.

Other approaches related to Objectives of the organization

  • Strategic planning: This approach involves developing a strategic plan that outlines the organization's mission, objectives, and strategies for achieving them. This includes setting short-term and long-term goals, identifying action steps for achieving those goals, and developing metrics for measuring progress.
  • Business process improvement: This approach involves analyzing the organization's processes and procedures to identify any areas of inefficiency and making changes to improve performance. This includes identifying and eliminating any redundant or unnecessary processes, streamlining existing processes, and implementing new technologies to improve efficiency.
  • Financial management: This approach involves developing and implementing financial management strategies to ensure that the organization is properly funded and is able to generate sufficient revenue to cover its costs and generate a reasonable return on investments. This includes budgeting, forecasting, and cash flow management.

These approaches are all essential for the organization to achieve its objectives and ensure its long-term success. By effectively implementing these approaches, the organization can ensure that it is well-positioned to achieve its long-term goals and objectives.

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Author: Jolanta Szewczyk