Business Objectives Examples for Small Business
Once the strategic analysis of the firm has been completed, the strategy-makers responsibility is now to take initiative for setting business objectives examples. These business objectives examples would form the basis for formulating a strategy. As stated earlier, there can be no strategy without objective. In fact, the strategic analysis provides adequate information for setting objectives for the firm. Strategy-makers review the information and use them for establishing (or setting) business objectives examples. Choosing appropriate objectives requires a deep understanding of the external environment and the opportunities it presents, together with an analysis of the competences of the firm the vision and values of the firm, and demands of financial markets.
Establishing an objective is a direction-setting task. A mission statement provides an overall goal for the organization but does not enable managers to go for action. Managers, for that reason, need to adapt the mission into definite performance objectives. Instituting objectives transforms vision and mission into definite performance results. Objectives establish for strategic performance and financial performance for accomplishment. Top managers create wider objectives with lengthier time skylines than do in succession lower levels of managers. Lower level managers create objectives constructed on the middle-level objectives. In operation, lower level objectives provide the means for attaining middle-level objectives. In addition, in turn, middle-level business objectives examples provide the means for attaining top-level business objectives examples.
Read more: Strategic Objective Examples and Explanation
Meaning & Nature of Business Objectives Examples:
An objective describes the results to be achieved by the firm. It refers to measurable targets. An objective is a specific commitment to achieve a measurable result within a given period. The objective must clearly show what the company wants to achieve and when it wants to achieve it. An objective needs to be written in concrete, quantitative and measurable terms. A well-formulated objective must be SMART, where S stands for specific, M for measurable, A for achievable (or ‘Appropriate’ – appropriate to resources, environment, and technology of the company), R for realistic, and T for time-bound. These are the business objectives examples.
Learn more: Explanation of SMART
Some writers are of the view that there should be a dissimilarity between ‘objective’ and ‘goal’. However, managers generally prefer to use both the terms interchangeably. The above are the examples of operating objectives, used by operational managers and mid-level managers for implementing their plans with specific targets in mind.
In strategic management, we are more concerned with strategic performances objectives and financial performance objectives. Strategic performance objectives are concerned with sustaining and improving the company’s long-term market position and competitiveness. On the other hand, financial performance objective is related to achieving financial gains for having a strong financial standing. Beneath are specific samples of financial performance objectives and strategic performance objectives.
Financial Performance Business Objectives Examples:
- Higher product quality.
- A longer market share.
- Lower costs relative to key competitors.
- Quicker on-time delivery than competitors.
- Superior customer service.
- Achieving ISO certificate.
- Increased goodwill in the industry.
- Wider geographic coverage.
- Increased ability to compete in international markets.
- Finally, exceeding customer satisfaction.
Strategic Performance Business Objectives Examples:
- Firstly, faster revenue.
- Higher dividends.
- Larger profit margins.
- Stable earnings during recessionary periods.
- Higher returns on invested capital.
- Rising stock price.
- Higher earnings per share.
- Bigger cast flow.
- Enhancing financial resources.
Classification of Business Objectives Examples:
Based on the time dimension, there may be broadly two types of objectives: short-term and long-term objectives. Short-term means one year or less than one year. Long-term means for more than one year. However, some people in the business world talk of ‘intermediate-term objective’, which is established for a time period between one and three years. In such a situation, the long-term objective is one, which is set for a period of more than three years. Hover, we should keep in mind that the definition of long-term objective differs from author to author and from organization to organization. For instance, Robinson and Pearce are of the view that longstanding objectives are “results a business seeks to attain over a precise period of time, archetypally five years.”
According to them, strategic planners commonly establish long-term objectives in seven areas: profitability, productivity, competitive position, employee involvement, employee relations, technological leadership, and public responsibility. In order to ensure attainability, the long-term business objectives examples need to be acceptable, flexible, and measurable over a period, motivating, suitable, understandable and achievable.
Based on the business-structure of an organization, there may be corporate objectives, business-unit objectives, functional objectives, and operating objectives. These objectives cascade down from the top to the lowest levels of the organization, thus creating hierarchy corporate objectives are set at the top level of the organization by the board of directors and the senior managers. The business-unit level objectives are formulated based on corporate objectives. Based on the business-unit objectives, the functional objectives are set by the mid-level or departmental level managers that are meant to be achieved in the short run.
|Levels of Organization||Objectives||Examples|
|Corporate level||Corporate objectives||Increasing shareholder return.
Diversification of business.
Improving corporate citizenship.
|Business-unit level||Business-unit objectives||Double-digit annual earning growth.
Improving quality of products.
Expanding market share
|Functional level or department level||Functional objectives||Increasing profits on Brand-A by 10% during the year.
Expansion of market share by 5% during the year.
|Operating level||Operating objectives||Adding 20 more salespepople in the northern sales territory.
Increasing number of dealers in the souththern sales territory by 30 percent.
The necessity of Business Objectives Examples:
Organizational success depends substantially on sound objectives. Objectives are essential for a variety of reasons. They –
- Provide direction to the organization as a whole and to employees in particular.
- Help in the evaluation of the performance of employees and the departments.
- Reveal priorities in what the organization what to achieve and in the allocation of resources.
- Deliver a basis for effective forecasting in the organization, and
- Finally, assist in organizing, motivating and controlling the activities.
Approaches to Objectives Setting: Top Down or Bottom Up Approach?
Business objectives examples need to be set for the whole organization over and above for each department and division. Even individual objectives, consistent with departmental objectives, are also common. Organizations may use different approaches for setting objectives at different levels.
What should be the approach for setting objectives in an organization? There is no short-cut answer. You can follow either a top-down approach or a bottom-up approach. Some organizations follow a combination of both approaches. In the case of the top-down attitude, the elder managers set the objectives constructed on the needs of the association, and then they permit down these to the lower levels. When managers at the top level foresee that there would be a downside in the market in the near future due to some environmental reasons, they may find no alternative but to take drastic measure to improve profitability.
Therefore, they may set an objective like this: “To reduce the number of operating level employees by 7% in Factory A and Factory C within the next three months.” The mid-level and operating level managers would simply undertake steps for the realization of the objective. This is a top-down approach. On the other hand, in some organizations, managers follow the bottom-up approach. That means, the senior managers ask the lower level managers to set objectives for their units and send them to the top-level for review and approval. This approach encourages ‘buy-in’ of the business objectives examples from all employees.
Long-Term Objectives and Competitive Strategy:
Strategic management is primarily concerned with formulating and implementing a competitive strategy. It does not mean that functional strategies are ignored. Management specialists argue that the period for competitive strategy should be consistent, usually from two to five years. The period for long-term business objectives examples should also be the same for both long-term objective and competitive strategy are interdependent. It is common among business firms to set long-term objectives in terms of growth in assets, growth in sales, growth in market share, improvement of profitability, adoption of vertical integration, expansion of business through diversification, corporate social responsibility, etc.
Competitive strategy formulates based on long-term objective, which should have a timeline. For the active operation of competitive strategy, long-term objectives are worn-out to yearly objectives. We should bear in mind that yearly objectives aid as mileposts for attainment the long-term objectives. Each long-term objective may require a set of annual objectives. An organization should set annual objectives for production, marketing, finance, research and development, human resources, management information systems, etc. as a plan-creator; you have to usage the yearly objectives for strategy operation. You will use the long-term objectives for strategy formulation.
Since long-term business objectives examples are important measures of managerial performance, they should establish at corporate and functional levels of an organization. All objectives should communicate to the stakeholders so that they can understand their role, make appropriate decisions, reduce conflicts among themselves during strategy implementation, set organizational priorities, and set standards for evaluating the performance of the departments, divisions, employees and the entire organization.
Once you have decided and set long-term business objectives examples for your organization, you are now ready to formulate strategies in line with the objectives. The next time detail out the issues related to the formulation of business-level strategies and corporate-level strategies.