Most people think that profit is the
primary business objective. However, this is an over-simplification:
To perform well and survive in the long run, an organization needs to have
result oriented objectives in several areas meeting the claim of internal
(stock holders, managers, employees) as well as external (customers, suppliers,
governments, unions, competitors, communities and general public)
stake-holders. These could be divided into three categories:
·
economic goals (survival, profitability, growth,
market share, productivity);
·
employee related goals (economic needs, socialization
needs, growth needs);
·
societal goals (economic vitality, resource
conservation and other demands)
A. ECONOMIC
GOALS: These include:
1. Survival:
The firm’s
ability to survive is an important corporate goal. Unless a firm survives, it
cannot meet other goals suck making profits, producing goods and services for
customers, meeting societal obligations.
2. Profitability:
According to Peter Druker, profitability is important for several reasons.
First, it is the ultimate measurement of bush performance in a free market
economy. Only companies that can market needs will be rewarded in a competitive
market. Sect profitability is the premium that rewards risk taking, which alloy
firm to cover the costs of staying in business. Third, profits make possible
for the firm to expand and to engage in new venture. Additionally, profits make
it possible for a firm to meet employee related and societal goals.
3. Growth:
A firm’s growth usually means an increase in its sale volume and other
resources. Growth has been an important corporate goal for two important
reasons; it provides a firm with ability to do different things, and it is
often used as a measure of business success.
4. Market Share: Market share shows a firm’s ability
to penetrate into the market, and is measured by the percentage of its
sales within
industry. Market position is considered to be an important corporate goal for
two major reasons; it measures the degree to which a company’s products and
services have market acceptance; market share has significant influence on
profitability.
5. Productivity: Productivity is the ratio of an
organization’s inputs to its outputs. If an organization uses fewer resources
than others in producing the same quantity and quality of goods or services,
its productivity is said to be higher than others. As industrial competition
increases on a global scale and as natural resources are becoming increasingly
scarce, improving productivity should be one of the most important
organizational goals in the years ahead.
B. EMPLOYEE - RELATED GOALS: Individual employees want different
things from their organizations, and the same employee will meet different
needs at different stages of his life. Economic needs such as job security,
pay, and fringe benefits demand managerial notion in view of their significant
influence on worker performance. Once people’s basic economic needs are
satisfied, satisfying socialization needs (to belong, to associate, to gain
acceptance from associates, to give and receive friendship and affection)
becomes increasingly important. Growth needs include the needs for competency,
achievement, and self actualization. In organizational tings, these needs can
be satisfied when employees perform interesting and challenging task that
utilize their abilities and skills.
SOCIETAL GOALS: To achieve the above economic goals, a
firm must produce the goods the consumer wants. If a firm is not able cr4eate
economic value for society, it may not stay in the business long enough to make
a profit. In recent years social responsibility has tome major concern for many
business firms. Three important societal goals could be listed thus:
(1)
economic vitality employing the ability of a firm to keep the economy healthy
and competitive through fruitful ventures;
(2) resources conservation implying
the ability of the firm to produce needed goods and services with less pollution
and waste.
(3) Other societal expectations include maintenance of legal
and ethical standards, hiring socially and physically handicapped persons,
supporting art exhibitions, taking care of the poor and elderly etc.
The above
discussion clearly indicates the fact that a business firm has to satisfy the
conflicting claims of both internal and external stakeholder while trying to
realize corporate goals. In this regard both economic as well as non-economic
goals are important, and management should keep this point in mind while trying
to translate its pious intentions into actions through various official
objectives. Official objectives are statements of what an organization says and
what it wants various publics to believe. They are often couched in abstract phraseology
such as: to provide products and services of the greatest possible value to our
customers, to make the organization a coordinated team, to encourage employees
to do their best and they are seldom re-examined or changed. Usually they are
so general as to be of little practical use and so innocuous that no body can
be against them.
Operational or real goals, on the other hand, tell us what the
organization is trying to do actually. It is behaviour that counts. The
university that proclaims that its objectives to limit class size, to
facilitate close student -facility relations, and to actively involve students
in the learning process, and then puts its students into lecture halls of 100
or more, is not unusual. If we are to develop comprehensive and consistent
plans, it would be useful to differentiate between official and operational
goals. An understanding of the latter’s existence can help in explaining what
otherwise may seem like management inconsistencies.