Strategic Strategic ManagementManagement

Chapter 3Chapter 3

Establishing Establishing Organizational Organizational

Direction: Mission & Direction: Mission & ObjectivesObjectives

Group Group Members:Members:

Sara ZahidSara ZahidSaima BibiSaima BibiSidrah KhanSidrah KhanFahim Akthar MirzaFahim Akthar MirzaGhulam MuhammadGhulam MuhammadZubair AhmadZubair AhmadAwais M. Ali KhanAwais M. Ali KhanSyed Zaheer AbbasSyed Zaheer Abbas

Fundamentals of Organizational Fundamentals of Organizational MissionMission

What is Organizational Mission?What is Organizational Mission? Organizational Mission is the purpose for which, Organizational Mission is the purpose for which, or the reason why an organization exists.or the reason why an organization exists.

Why is Organizational Mission Important:Why is Organizational Mission Important: It helps focus human effort in a common direction.It helps focus human effort in a common direction. It helps ensure that the organization will not pursue It helps ensure that the organization will not pursue

conflicting purposes.conflicting purposes. It serves as a general rationale for allocating organization It serves as a general rationale for allocating organization

resources.resources. It establishes broad areas of job responsibilities within It establishes broad areas of job responsibilities within

the organization.the organization. It acts as a basis for the development of organizational It acts as a basis for the development of organizational

objectives.objectives.

What information Appears in Mission What information Appears in Mission Statement?Statement?

Company Product or ServiceCompany Product or Service MarketMarket TechnologyTechnology Company ObjectivesCompany Objectives Company PhilosophyCompany Philosophy Company self conceptCompany self concept Public Image.Public Image.

Fundamentals of Organizational Fundamentals of Organizational MissionMission

The Nature of Organizational The Nature of Organizational ObjectivesObjectives

Definition of Organization: An Organizational Objective is a target

toward which the organization directs its efforts.

Importance of Organizational Objectives:Importance of Organizational Objectives: Management writers claim, that objectives should be used Management writers claim, that objectives should be used

mush as mush as NAVIGATORS USE THE NORTH STARNAVIGATORS USE THE NORTH STAR..

• Managers should use organizational objectives as a guide in Managers should use organizational objectives as a guide in decision making.decision making.

• Managers should use organizational objectives as a guide for Managers should use organizational objectives as a guide for increasing organizational efficiency.increasing organizational efficiency.

• Managers should use organizational objectives as a guide for Managers should use organizational objectives as a guide for performance appraisal.performance appraisal.

Types of Objectives in Organizations:Types of Objectives in Organizations:1. Short Run Objectives1. Short Run Objectives

2. Long Run Objectives.2. Long Run Objectives.

Areas in which Organizational Objectives are Areas in which Organizational Objectives are Established:Established:

• Market StandingMarket Standing: : The Position of an organization where it stands.The Position of an organization where it stands.• InnovationInnovation: : Any change made to improve methods of conducting Any change made to improve methods of conducting

organizational business.organizational business.• Productivity:Productivity: The level of goods or services produced by an The level of goods or services produced by an

organization relative to the resources used in the organization relative to the resources used in the production process. production process.

• Resource Levels:Resource Levels: The relative amounts of various resources held The relative amounts of various resources held by by an organization such as Inventory, Equipment an organization such as Inventory, Equipment and cash. and cash.

• Profitability:Profitability: The ability of an organization to earn revenue dollars The ability of an organization to earn revenue dollars beyond the expenses necessary to generate the beyond the expenses necessary to generate the revenue. revenue.

• Manager Performance & Attitude:Manager Performance & Attitude: The Quality of managerial The Quality of managerial performance and the rate at which managers are performance and the rate at which managers are developing personally. developing personally.

• Worker Performance & Attitude:Worker Performance & Attitude: The Quality of non management The Quality of non management performance and such employees feelings about their performance and such employees feelings about their work. work.

• Social Responsibility:Social Responsibility: The obligation of business to help improve The obligation of business to help improve the welfare of society while it strives to each the welfare of society while it strives to each organizational objectives. organizational objectives.

Characteristics of High Quality Characteristics of High Quality Organizational Objectives:Organizational Objectives:

Managers should develop organizational objectives that Managers should develop organizational objectives that are specific.are specific.

Managers should set organizational objectives that require Managers should set organizational objectives that require a desirable level of effort.a desirable level of effort.

Managers should establish organizational objectives that Managers should establish organizational objectives that are reachable.are reachable.

Managers should establish organizational objectives that Managers should establish organizational objectives that are flexible.are flexible.

Managers should establish organizational objectives that Managers should establish organizational objectives that are measurable.are measurable.

Managers should develop organizational objectives that Managers should develop organizational objectives that are consistent in the long run and the short run.are consistent in the long run and the short run.

The Process of Establishing The Process of Establishing Organizational Direction:Organizational Direction:

Step 1: Reflecting on the Results of an Step 1: Reflecting on the Results of an Environmental Analysis:Environmental Analysis:Data should be drawn from all organizational environment Data should be drawn from all organizational environment levels – The general, operating, and internal environment.levels – The general, operating, and internal environment.

Step 2: Developing an Appropriate Step 2: Developing an Appropriate Organizational Mission:Organizational Mission:An An Appropriate Organizational MissionAppropriate Organizational Mission is one that reflects is one that reflects the organizational environment and thereby increases the the organizational environment and thereby increases the probability of the organization’s long term survival.probability of the organization’s long term survival.

Step 3: Establishing Appropriate Step 3: Establishing Appropriate Organizational ObjectivesOrganizational Objectives : : Objectives that are Objectives that are consistent with an appropriate mission, must be consistent with an appropriate mission, must be formulated.formulated.

Analyzing Environmental Trends:Analyzing Environmental Trends:

Studying relevant trends over several years can result in a better understanding of factors that influence organizational success.

Developing Objectives for the Organization as a Developing Objectives for the Organization as a whole:whole:

Profitability Objectives:Profitability Objectives: Are organizational targets that Are organizational targets that focus on the ability of an organization to earn revenue dollars focus on the ability of an organization to earn revenue dollars beyond the expenses necessary to generate the revenue.beyond the expenses necessary to generate the revenue.

Guidelines for Establishing Profitability Guidelines for Establishing Profitability Objectives:Objectives: They are generally established by Collecting and Analyzing They are generally established by Collecting and Analyzing information that compares specific organizational data to information that compares specific organizational data to similar data for other organizations or groups of organizations.similar data for other organizations or groups of organizations.

Developing a Hierarchy of Objectives:Developing a Hierarchy of Objectives:The purpose of establishing a hierarchy of objectives is to The purpose of establishing a hierarchy of objectives is to ensure that each significant segment of the organization ensure that each significant segment of the organization knows what role it must play on both a long term and a knows what role it must play on both a long term and a short term basis, in order for the organization to reach its short term basis, in order for the organization to reach its over all objectives.over all objectives.

Developing Individual Objectives:Developing Individual Objectives:Individual objectives are targets that specific people within Individual objectives are targets that specific people within an organization are attempting to reach. Individual an organization are attempting to reach. Individual objectives are designed so that accomplishing each one objectives are designed so that accomplishing each one contributes to the accomplishment of the broader objectives contributes to the accomplishment of the broader objectives of the department.of the department.