Strategic goal

From CEOpedia | Management online
Revision as of 05:10, 18 November 2023 by Sw (talk | contribs) (Text cleaning)
(diff) ← Older revision | Latest revision (diff) | Newer revision → (diff)

Strategic goal are understood colloquially as what we would like to achieve in the future, so we can also define them as our intentions. They give, and determine, the sense of existence of each unit, system etc. By referring this definition specifically to enterprises, we can define goals as planned undertakings that are the result of the specific needs of the given organization, as well as its surroundings. The main principle of determining goals is their clear and transparent determination, so that they leave no doubt as to compliance with the mission of the company. In addition, they should be strictly formulated, measurable, ambitious, realistic and timely (SMART principle ).

The practice of defining goals

A well-defined strategic goal must answer the following questions:

  • What? What we do?
  • Where? In which area we make changes?
  • When? What is our deadline?
  • How? What we need to achieve the goal?

Strategic goals in the hierarchy

Objectives are subject to prioritization and are determined at the following three levels:

  • strategic
  • tactical
  • operating

Of the above-mentioned stages, the strategic stage is the first and the most important in the hierarchy. The strategic goals set therein are numerically small and very general, so they mostly concern the global policy of the company, which in turn follows closely from its mission. It can therefore be stated that proper and careful definition of the vision that the organization will implement is crucial to formulating correctly the strategic goals. It is also worth noting that due to the very wide range of activities and long-term nature, strategic goals are subject to the most flexible time frames in the hierarchy.

A statement of the strategic goal and company mission

These are extremely different definitions, although the mission of the company does not exclude the purpose or purpose of the mission. The company's mission can be understood as broadly defined directions of enterprise development. This is the state to which the organization is heading. On the other hand, the goal of the organization is a set of intentions that leads to the achievement of a given state. The formulated goals are specific tasks that can be completed within a certain time interval. What distinguishes the goal from the mission is that the goals are more detailed and are, in a way, a "way" to accomplish the mission that we can understand as the final state.

Differences between the strategic goal and strategy

The strategy shows how we can achieve our goals. The strategy guides the organization's activities and shows how to use the potential. It is implemented through:

  • mission - the state of the target, the enterprise's intentions
  • action domains - markets
  • strategic advantage - the leader's position
  • strategic goals - specific actions to be implemented in the future within a strictly defined time horizon
  • functional action program - implementation of the plan

Setting strategic goals

Strategic goals are defined as already mentioned, mainly considering the vision that the company intends to pursue. This is the most important criterion, however, one should not forget about taking into account other factors, such as analyzing the macro - environment of the organization, its competition, internal situation at the moment of formulating it, or finally the needs of the environment. Importantly, these goals can not be in any way contradictory.

In every major organization, managers are responsible for setting goals, at the appropriate level to make such decisions. In the case of strategic goals, they are most often responsible for the appointment of a given organization, successively management and top managers.

The role of strategic goals

Well-formulated strategic goals become the basis for the next development of strategic plans. Strategic plans, in turn, have the task of setting priorities for actions and making a series of decisions at various levels, enabling the implementation of previously assumed strategic objectives. These, in turn, will allow later development of tactical goals by top and middle level managers. This goal classification is presented in the form of a goal tree (or a goal classifier). In the light of the aforementioned role of strategic goals, it is worth noting that in the case of incorrect definition, all minor objectives will also be wrong, which may negatively affect all plans of the company.

Examples of Strategic goal

  • Increase profitability: Companies need to increase profitability in order to stay competitive and remain viable. This goal involves increasing revenue and reducing costs in order to maximize profits.
  • Expansion: This can include expanding into new markets, new products, or new services. It can also include geographic expansion, such as opening new stores or locations in different cities or countries.
  • Develop and implement new strategies: This could involve developing a new marketing strategy, a new customer service strategy, or a new technological strategy. It could also involve a shift in the company's overall direction and focus.
  • Increase customer satisfaction: Companies need to focus on increasing customer satisfaction in order to remain competitive. This could involve improving customer service, providing better quality products and services, or improving the overall customer experience.
  • Increase efficiency: Companies need to be as efficient as possible in order to maximize profits. This could involve streamlining processes and procedures, as well as finding ways to reduce waste and increase productivity.

Advantages of Strategic goal

The strategic goal has many advantages that help companies to reach their objectives. These advantages include:

  • Focusing on the long-term: Strategic goals provide a clear vision and direction for the organization to work towards in the long-term. This helps to prioritize resources and ensure that the company is making progress towards its ultimate mission.
  • Encouraging creativity: Strategic goals provide a framework for innovation. They can be used to bring out the best ideas from employees and to motivate them to come up with creative solutions to problems.
  • Improving efficiency: By setting clear goals, organizations can identify areas where they can optimize their processes and increase efficiency. This helps to save time and resources and can lead to better results.
  • Enhancing collaboration: Strategic goals can help to bring employees together in a common cause and create a sense of shared purpose. This can lead to greater cooperation and a stronger team spirit, which can have a positive impact on the company’s performance.
  • Enhancing accountability: Setting strategic goals helps to make sure that everyone in the organization is accountable for their contributions. This helps to ensure that all employees are working towards the same objectives and that there is a system in place to track progress.

Limitations of Strategic goal

The limitations of strategic goals include:

  • Limited resources: Strategic goals are limited by the resources available in terms of money, personnel, technology, and other factors. This can lead to the organization not being able to achieve its goals, or having to scale back their ambitions.
  • Unrealistic goals: Unreasonable goals, such as those that are too ambitious or too vague, can be difficult to achieve and lead to frustration.
  • Unclear objectives: Without clear objectives, it is difficult for the organization to know what it is trying to achieve and how to measure success.
  • Poor communication: If there is a lack of communication between the different stakeholders in an organization, it can lead to confusion and a lack of alignment with the overall objectives.
  • Poor planning: If strategic goals are not well planned and thought through, it can lead to inadequate resources being allocated and a lack of focus on the most important goals.

Other approaches related to Strategic goal

  • The Balanced Scorecard: This approach to goal setting focuses on a company's overall performance, taking into account organizational goals, financial goals, customer goals, and internal processes. The idea is that the company can track progress and measure success against these goals.
  • The Objectives and Key Results (OKR) framework: This framework focuses on setting clear and measurable objectives and key results, so that employees and teams can understand their goals and measure their performance against them.
  • The Portfolio and Program Management (PPM) framework: This framework focuses on establishing a portfolio of programs and initiatives that can be managed and tracked to ensure that they are meeting the goals and objectives of the organization.
  • The Strategy Map framework: This approach to goal setting focuses on providing an overview of the company's strategy and how it will be achieved. It is used to create a shared vision and set clear objectives that all teams can work towards.

In summary, there are several approaches to setting strategic goals, including the Balanced Scorecard, Objectives and Key Results (OKR) framework, Portfolio and Program Management (PPM) framework, and the Strategy Map framework. Each of these approaches focuses on different aspects of goal setting, and each can be used to ensure that the company is meeting its goals and objectives.


Strategic goal — recommended articles
Benefits of planning — Strategy — Goals of organization — Strategic intent — Change management — Beam of objectives theory — Organizational planning — Strategic planning — Strategy deployment

References

Retrieved from "https://ceopedia.org/index.php?title=Strategic_goal&oldid=97075"