Strategic Objectives Examples and Explanation
This article carries the explanation of strategic objectives examples. Once the firm’s strategic analysis has been completed, the strategy-makers duty is now to take the initiative for setting strategic objectives. These would form the basis for making up the strategy. As stated earlier, there can be no strategy without purpose. The strategic management analysis provides all the right information for setting strategic objectives for the firm. Strategy-makers review the information and use it for establishing (or setting) objectives. Choosing appropriate goals requires a deep understanding of the external environment. And the opportunities it presents, together with an analysis of the firm’s right stuff, the firm’s vision and values, and the demands of financial markets.
Setting up an objective is a direction-setting task. A mission statement provides an overall goal for the organization but does not enable managers to take action. Managers require to change the mission into particular performance strategic objectives. Forming objectives alter vision and mission into precise performance results. Objectives must set for strategic performance and financial performance for achievement. Top-level managers fixed broader objectives with longer time horizons than do continuously lower levels of managers. Lower-level managers create objectives based on middle-level objectives. In force, lower-level strategic objectives afford the means for attaining middle-level strategic objectives. And, in order, middle-level objectives provide the means for achieving the top-level strategic objectives.
Meaning & Nature or SMART:
As an article of strategic objectives examples and explanation, here will discuss the meaning and nature. An objective describes the results to achieve by the firm. It refers to measurable targets. An objective is an affirmative obligation to attain a quantifiable outcome within a given time surround. It must display what the corporation desires to achieve and when it wants to reach it. An objective needs to write in qualitative, measurable, and concrete terms.
A well-formulated objective must be SMART, where
S stands for Specific
M for Measurable
A for Attainable or Achievable or Appropriate
R for Relevant or Realistic, and
T for Time-Based.
Examples of SMART:
- To increase the sales of all products of the company by 5% during the years 2010.
- Achieving a 20% increase in the sales of Brand-X by December 31, 2010.
- To increase unit sales of ‘5M Family Software APANJON’ in Chittagong area by 5000 units by June 30, 2010.
Some writers are of the view that there should be a distinction between ‘goal and objective.’ However, managers generally prefer to use both the terms vice versa. The above is the operating strategic objectives examples used by operational managers. And mid-level managers for putting into effect their plans with specific targets in mind.
We are more concerned with two strategic objectives as strategic performance objectives and financial performance objectives in strategic management. Strategic performance objectives are concerned with sustaining and improving the company’s long-term market position and competitiveness. Alternatively, financial performance objectives are interrelated to reaching economic advantages for having a robust financial upright. Underneath are specific samples of strategic performance objectives and financial performance objectives following strategic objectives examples. For instance:-
Examples of Strategic Performance Objectives:
The strategic objectives examples of strategic performance objectives include below. Such as:-
- A longer market share
- Higher product quality
- Lower costs relative to key competitors
- Superior customer service
- Quicker on-time delivery than competitors
- Exceeding customer satisfaction
- Wider geographic coverage
- Achieving ISO certificate
- Increased easily to compete in international markets
Examples of Financial Performance Objectives:
The strategic objectives examples of financial performance objectives include below. Such as:-
- 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
Types of Strategic Objectives Examples:
Strategic objectives examples broadly type based on the time dimension. Such as:-
- Firstly, short-term strategic objectives.
- Secondly, long-term strategic objectives.
Short-term strategic objectives mean one year or less than one year. Long-term strategic objectives mean more than one year. However, some people in the business world talk of ‘intermediate-term strategic objectives,’ which establish between one and three years. In such a situation, the long-term strategic objectives are set for more than three years. Hover, we should keep in mind that the definition of long-term strategic objectives differs from author to author and also from organization to organization.
For example, Pearce and Robinson are of the view that long-term strategic objectives are “results a business seeks to achieve over a specific period, typically five years.” According to them, strategic planners commonly establish long-term strategic objectives in seven areas. Such as- profitability, productivity, competitive position, employee involvement, employee relations, technological leadership, and public responsibility are examples. The long-term strategic objectives need to be acceptable, flexible, and measurable over time motivating suitable, understandable, and achievable to ensure attainability.
Downward Cascade of Strategic Objectives Examples:
The business structure maybe corporate objectives, business-unit objectives, functional objectives, and operating objectives. These strategic objectives cascade down from the top to the organization’s lowest levels, thus creating a hierarchy (see the following table). The board of directors and the senior managers set the organization’s top-level to make the corporate strategic objectives. The business-unit level strategic objectives formulate based on corporate strategic objectives. Based on the business unit, the functional strategic objectives are set by the mid-level or departmental level managers to achieve in the short run. Such as:-
|Corporate level||Corporate Objectives|
|Business-Unit level||Business-Unit Objectives|
|The functional level of Departmental level||Functional Objectives|
|Operating level||Operating Objectives|
The necessity of Strategic Objectives:
Organizational success depends substantially on sound objectives. Strategic objectives are essential for a variety of reasons. For instance:-
- Help in the evaluation of the performance of employees and the departments;
- Make available a basis for action planning in the business;
- Reveal priorities in what the organization wants to achieve and also in the allocation of resources;
- Provide the way to the market as an entire and to employees in specific;
- Lastly, assist in controlling, organizing, and motivating the activities.
Setting up a Top-Down or Bottom-up Approach?
Objectives need to be set for the entire organization as well as for each division and department. Even individual objectives, of a piece with departmental objectives, are also common. Organizations may use different approaches for setting objectives at different levels. Such as top-down and bottom-up approaches.
What should be the approach to setting objectives in an organization? There is no short-cut answer. You can follow either the top-down approach or a bottom-up approach. Some organizations follow a combination of both approaches. In the case of the top-down approach, the senior managers set the objectives based on the organization’s needs, and then they pass down these to the lower levels. When managers at the top level foresee that there would be a downside in the market shortly due to some situational reasons, they may find no alternative but to take drastic measures to improve profitability. So, they may set an objective like this:
“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 undertake steps for the realization of the objective. It is a top-down approach.
On the other hand, in some organizations, managers follow the bottom-up approach. It means the senior manager asks the lower-level managers to set objectives for their units. And he sends them to the top level for review and approval. This approach encourages ‘buy-in’ of the objectives of all employees.
Long-Term Strategic Objectives and Competitive Strategy:
Strategic management is primarily concerned with formulating and implementing a competitive strategy. It does not mean that functional strategies ignore. Management specialists argue that the time frame for competitive strategy should be consistent, usually from two to five years. The time frame for long-term objectives should also be the same, for both long-term objectives 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 duty, etc. A competitive strategy is formulated based on a long-term objective, which should have a timeline.
For effective utilization of the competitive strategy, long-term objectives are broken down into annual objectives. We should keep in mind that yearly objectives serve as milestones for reaching 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. You have to use the annual objectives for strategy utilization as a strategy-maker. You will use the long-term objectives for strategy formulation.
Since long-term Strategic objectives are essential measures of managerial performance, they should establish at the organization’s levels. All objectives should communicate to stakeholders so that they can understand their role. They can also make appropriate decisions, reduce conflicts among themselves during strategy utilization, set organizational priorities, and set standards for evaluating the performance of the departments, divisions, employees, and the entire organization.
Conclusion of Strategic Objectives Examples:
Once you have chosen long-term Strategic objectives for your organization, you should formulate strategies in line with the objectives. The next articles detail out the issues related to the formulation of business-level strategies and corporate-level strategies. If you need any query about the strategic objectives examples, you can ask in the comment section.