OBJECTIVES

Definition:
It is a specific result that an organisation tries to achieve within a definite time period and available
resources.
Objectives can be set at two levels:
(1) Corporate level: These objectives are for the whole organisation.
Examples:
We aim for a return on investment of at least 15%
We aim to achieve an operating profit of over Rs. 10 Crore
(2) Functional level: these objectives are set for only a particular department / function.
Examples:
We aim to achieve a market share of 10%
We aim to achieve 75% customer awareness of our brand in our target markets

Role of objectives in Strategic Management:

Objectives play an important role in strategic management as seen in the following points;

The relationship of an organisation with its environment is understood with the help of
Objectives.
By framing objectives, an organizational makes a commitment for achieving the objectives for
its employees, customers and the society.
Strategies are decided on the basis of Objectives. Strategies are prepared according the
objectives. Example: if an organisation has very high objective, then it will select growth
strategy and if the objective is not so high, organisation can select stability strategy. Hence
strategy is decided on the basis of objective.
The level of performance (standards) is decided on the basis of Objectives.
Objectives help in deciding the level of performance of an organisation so that
objectives can be achieved. If level of performance is not set, then organisations
cannot achieve their objectives. Hence objectives help in deciding standards, that is
level of performance.

Formulation of objectives:
Following points are considered while designing (formulating) an Objective for an organisation;

Objectives are formulated (designed) with the help of all those employees who are going
to achieve those objectives

All the departmental objectives within the organization should support the overall
objective. Example: marketing, finance, HR objectives must match with the overall
objective of the organisation.
Objectives must be achievable
Objectives should be realistic. It must not be such that it becomes difficult to achieve.
Objectives should be innovative.
The number of objectives for each manger should not be too many.
Objectives should be ranked according to their priority.

Setting objectives for the organization is one of the most important and challenging task, failure and
success of the firm depends upon the setting of strategic objectives. Strategic objectives are formulated
for a longer period and are set for three to five years often.