Objectives

Establishing objectives converts firm's mission into concrete performance outcomes.

Objectives need to be set for every key result area.

Objectives are required both for long term and short term

Types of objectives:

• Financial objectives
• Strategic objectives

Finance objectives

This relates to the firm's financial performance - usually improving the financial performance.

An objective set by a company in which the target state is measured in monetary terms, such as a certain amount of profits, or a certain percentage increase in profits over a period of time.

Examples of financial objectives:

• Grow earnings per share 15% annually
• Boost annual return on investment from 15% to 20% within three years
• Increase annual dividends per share to stockholders by 5% each year
• Maintain a positive cash flow every year

Strategic Objectives

• Focused on improving long-term, competitive business position
• Increase firm’s market share
• Overtake key rivals on quality or customer service or product performance
• Attain lower overall costs than rivals
• Boost firm’s reputation with customers
• Attain stronger foothold in international markets
• Achieve technological superiority
• Become leader in new product introductions
• Capture attractive growth opportunities

Short  range objectives

Short-term objectives represent the goals an organization sets that are centered on tasks that can be achieved within the next six months or, at the outset, within one year. An example of a short-term goal might be to increase sales by 10 percent.

Serve as stair steps for reaching long range performance.

Long range objectives

Performance goals of an organization, intended to be achieved over a period of five years or more. Long-term objectives usually include specific improvements in the organization's competitive position, technology leadership, profitability, return on investment, employee relations and productivity, and corporate image.

Prompt  actions now that will permit reaching targeted long range performance later.