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Corporate Level Perspectives


Corporate Level Perspectives

Corporate level perspectives



Objectives are the desired outcome that an organization seeks to achieve for its various stake holders – employees, share holders, customers, suppliers, society, and government. Organization develops both financial and strategic objectives. Financial objectives may include measures such as sales, ROI, profits, EPS, or return on equity. Strategic goals may include new customer, market, or product types to pursue.

Theoretically, objectives should be set for every element of an enterprise that top management wishes to be the subject of plans. There is no standard classification of perspectives or of the number of objectives that a company should have.

In practice, most companies have comparatively few long-range planning objectives. They generally set objectives for sales, profits, return on investment, margin, and share of market. Objectives for sales and profits are usually expressed in absolute numbers, percentages, or both. For example, the sales objectives may be ex- pressed in absolute dollars for each of the next five years. Or, the objective may be expressed as follows: “Increase sales 15 percent each year over the next five years.” Return on investment, margin, and market share is usually expressed in percentage terms.

Other areas in which perspectives are often set include product development, productivity, diversification, minority hiring, facility replacement, labor content of product, industry ranking, management development, working conditions, employment levels, and social responsibilities. This does not exhaust the list and many sub objectives are possible in each category.

Peter Drucker has said that objectives are necessary for every area of a business whose performance and results directly affect the survival and prosperity of the enterprise. He identified the following areas as in need of objectives: market standing, innovation, productivity, physical and financial resources, profitability, manager performance and development, worker performance and attitude, and public responsibility.3

Larger enterprises have need for objectives in more areas than do smaller companies. The reason is that more people are involved who need guidance in decision making, and many interests are concerned about objectives and the way they are to be achieved. If an overall statement of purpose and philosophydoes not exist, or if it is very short, there is no reason why the structure of objectives formulated in the planning process should not include aims that have no terminal point and that are classified as overall purpose and missions, creeds, or philosophies. Although one can draw conceptually clear distinctions within the network of aims, in practice it is not always necessary or desirable to do so.

Linking Objectives and Perspectives

Objectives and sub objectives should be closely related. This is so because in the actual operation of an enterprise there is a close relationship among the dominant economic objectives. For instance, an objective to maintain or increase return on investment equal to or above the industry average must be pursued in light of sales objectives, financial objectives, and objectives related to efficient use of resources. One cannot set one of these objectives without relation to the others. Depending upon where one starts, these objectives become sub objectives of each other.

This is illustrated here in which shows the dominant objectives of return on investment and the way other major objectives, as well as sub objectives, may be related to it. A more extensive tree of objectives could easily include other functions the objectives of which must mesh to get a desired return on investment.


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Posted by ZuzukiSX4  Posted on 31 Dec 
  • Perspectives
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