Few organisations have a single objective. They have a range of objectives which compete for the attention of managers and stakeholders. These include profitability, sales growth, retention of market share and risk containment.
These objectives are influenced by a range of cultural factors:
- Environmental factors –
- Societal values
- Pressure groups
- Government policy
- Organisational culture –
- History and age
- Leadership and management style
- Structure and systems
- Nature of business –
- Market situation
- Nature of products
- Expectations of stakeholders
Stakeholders cannot influence an organisation’s strategies without the existence of an influencing mechanism; they must hold some power over the organisation. Power can be exerted on an organisation in a number of ways. It could be shareholders voting down the pay awards of senior management; consumers boycotting your products; retailers refusing to stock your goods, etc. Different markets have different power dynamics. For example in the market for milk, the supermarkets and dairy processors hold the power to determine the price of milk. In the oil market, OPEC states virtually control the price by managing extraction.
Organisational objectives have traditionally been afforded a central role in influencing strategy. This often leads to rigid strategies incapable of amendment. The expectations and influence of stakeholders, both internal and external need to be taken into account when setting goals and objectives. Also ensure that strategies are open to adaptation and amendment during development to take account of stakeholder concerns.
Objectives should be set under a range of headings and then each category should be managed. Objective management needs predetermined planning and control processes.
Every management textbook will tell you that objectives should be SMART (Specific, Measurable, Achievable, Realistic and Time-bound). Other guidelines also need to be adhered to:
- There should be a hierarchy of objectives. You should weight your objectives from the most important to the least important.
- Objectives should be quantitative. You must satisfy the measurable part of SMART. An objective shouldn’t be to increase market share, it should be to increase market share by a pre-determined percentile.
- You shouldn’t be guilty of wishful thinking. The realism in your objectives should come from careful analysis and research. Analysis should be carried out according to pre-determined and documented processes.
- You need to be consistent in your objective setting. It is impossible to offer the highest level of quality in the market and simultaneously maximise profits. Quality costs.
It goes without saying that your marketing objectives should be derived from and should reflect your corporate objectives.
Organisations have primary and secondary objectives. For many years it was perceived wisdom amongst economists that profit maximisation was the sole primary objective of a commercial enterprise. However, management science has now evolved to recognise that professional managers pursue a far wider range of goals.
It is also recognised that many objectives defined as secondary have a direct influence on an organisation’s primary objectives and to ensure the achievement of your primary objective, you must first achieve your secondary objectives. In certain circumstances, secondary objectives may shift to become primary objectives. For example, in times of economic downturn, organisational survival or retention o market position may overtake the profit maximisation objectives.
Drucker (1955) suggested eight areas in which organisational objectives need to be developed and maintained:
- Market standing
- Financial and physical resource
- Market performance and development
- Worker performance and attitude
- Public responsibility
In recent years, public responsibility has become more important. In the 1980s, the concept of the triple bottom line was developed. This is often referred to as the alternative 3 ‘P’s’; People, Planet, Profit.
This approach to organisational goal categorisation was popularised by firm such as Bodyshop and its late creator, Anita Roddick. The triple bottom line places environmental quality and social equity on an equal footing as profit maximisation. Bodyshop’s mission statement includes the corporate view on social justice and human rights as an integral part of its business practice.
The theory of the triple bottom line argues that highlighting social issues and taking responsibility for the effect your business objectives will have on them will increasingly be the strategy of choice to enable sustainable competitive advantage