Business Goals Study Notes

BUSINESS GOALS Business goals refer broadly to the long-term, ultimate purpose of an organization. The term also refers specifically to short-term targets. Vision, mission, objectives, goals and targets are often used interchangeably but have distinct meanings in business literature:    Mission leads designed to mission. to objectives achieve the Objectives lead to goals designed to meet the objectives. Goals lead to targets set to reach the goals. Vision/Mission The mission, also called vision, value statement, principles or credo, is central to corporate strategy. Vision refers to the long-term perception of what the organization's purpose and position should be in the future. Mission evolves from vision vision leads to mission. But often vision and mission are used interchangeably. As Peter Drucker said, defining purpose and mission is difficult but enables setting objectives, strategies and focusing resources to achieve performance. A mission statement expresses an organization's enduring purpose, distinguishing it from similar firms. It identifies the scope of operations, products/services, markets, philosophy and technologies. It answers "What is our business?" A good mission eases strategy formulation, implementation and evaluation. A mission should:  Define what the organization is and aspires to be  Be focused enough to exclude unrelated ventures but allow growth  Distinguish the from all others  Guide evaluating current and prospective activities  Be clearly understood throughout the organization organization Answering these questions can reveal mission:  What is the basic purpose?  What makes the organization unique?  How might the business evolve in 5 years?  What sets the company apart?  Who are the main customers now and in future?  What are the key economic concerns now and in future?  What are the basic beliefs, values and priorities? The mission guides the organization's strategic development. It focuses action, sets strategies to reach crucial goals, builds a disciplined organization, and prevents splintering resources. There are many examples of organizations refocusing business by redefining mission and dramatically improving performance. Corporate mission statements guide companies ethically, operationally and financially. They articulate culture, strategies and aspirations - not just mottos/slogans. A key benefit of formulating mission is clearly defining the business. Mission and business definition are two sides of the same coin. Derek Abell suggests defining business along three dimensions: customer groups, customer needs satisfied, and how needs are satisfied. A 3D definition delineates boundaries and nature of the business - though few mission statements are so comprehensive. As Drucker advised, three questions help define/redefine business and mission:  What is our business?  What will our business be?  What should our business be? "What is our business?" can lead to spectacular results, especially when a successful company asks this question seriously. The environment is dynamic, so today's "What is our business?" becomes obsolete. Firms must anticipate relevant changes when defining their business, objectives and strategies. It's not enough to identify "What will our business be?" - this aims at adapting to anticipated changes. Firms should also ask "What should our business be?" to find the best firmenvironment fit. This is central to strategy - abandon or downplay some current business, emphasize/add promising new business. Mission alone can't ensure results. For success, the mission must be realistic, inspirational, committed to by management, and effectively strategized or it remains meaningless. Objectives, Goals and Targets Objectives are the basis for an organization's functioning and help justify its existence. Objectives attract people who identify with them to work for the organization. Broadly, objectives cover long-range aims, specific department goals, and individual assignments - long or short term. Goals are intermediate results to be achieved by a certain time, as part of the overall plan. A plan can have multiple goals. Specific goals are sometimes called targets. Objectives are long-term organizational results sought in pursuing the basic mission. Goals are short-term milestones to reach objectives. Goals should be measurable, quantitative, realistic yet challenging, prioritized, set at all levels, and stated in terms of accomplishments in all functions. Goals focus on strategy implementation, objectives on formulation. Goals guide resource allocation. Objectives shouldn't be static but dynamic, changing with the environment and organizational strengths/weaknesses. Firms should regularly review if objectives fit opportunities and resources, and modify them for the best fit. This has enabled many firms' remarkable success through prudent portfolio strategies and rapid growth. Environmental analysis reveals what the business should be. If this differs from the current business, the objectives and business definition need reorienting to match company resources to the environment. The long-term objectives may not change much, but environmental factors may necessitate modifying some objectives and redefining the business - what business the company should be in. The Importance of Objectives:  Justify the organization's existence and purpose  Provide direction for functioning  Enable management objectives  Aid strategic management  Coordinate decisions decision-makers  Offer standards for assessment and control  Support decentralization planning by and and effective