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Strategic Management Chapter 3 Establishing Organizational Direction: Mission & Objectives.

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Presentation on theme: "Strategic Management Chapter 3 Establishing Organizational Direction: Mission & Objectives."— Presentation transcript:

1 Strategic Management Chapter 3 Establishing Organizational Direction: Mission & Objectives

2 Group Members: Sara Zahid Sara Zahid Saima Bibi Saima Bibi Sidrah Khan Sidrah Khan Fahim Akthar Mirza Fahim Akthar Mirza Ghulam Muhammad Ghulam Muhammad Zubair Ahmad Zubair Ahmad Awais M. Ali Khan Awais M. Ali Khan Syed Zaheer Abbas Syed Zaheer Abbas

3 Fundamentals of Organizational Mission What is Organizational Mission? Organizational Mission is the purpose for which, Organizational Mission is the purpose for which, or the reason why an organization exists. or the reason why an organization exists. Why is Organizational Mission Important:  It helps focus human effort in a common direction.  It helps ensure that the organization will not pursue conflicting purposes.  It serves as a general rationale for allocating organization resources.  It establishes broad areas of job responsibilities within the organization.  It acts as a basis for the development of organizational objectives.

4 What information Appears in Mission Statement?  Company Product or Service  Market  Technology  Company Objectives  Company Philosophy  Company self concept  Public Image. Fundamentals of Organizational Mission

5 The Nature of Organizational Objectives Definition of Organization: An Organizational Objective is a target toward which the organization directs its efforts. Importance of Organizational Objectives: Management writers claim, that objectives should be used mush as NAVIGATORS USE THE NORTH STAR. Management writers claim, that objectives should be used mush as NAVIGATORS USE THE NORTH STAR. Managers should use organizational objectives as a guide in decision making. Managers should use organizational objectives as a guide in decision making. Managers should use organizational objectives as a guide for increasing organizational efficiency. Managers should use organizational objectives as a guide for increasing organizational efficiency. Managers should use organizational objectives as a guide for performance appraisal. Managers should use organizational objectives as a guide for performance appraisal.

6 Types of Objectives in Organizations: 1. Short Run Objectives 2. Long Run Objectives. 2. Long Run Objectives. Areas in which Organizational Objectives are Established: Market Standing: The Position of an organization where it stands. Market Standing: The Position of an organization where it stands. Innovation: Any change made to improve methods of conducting Innovation: Any change made to improve methods of conducting organizational business. organizational business. Productivity: The level of goods or services produced by an organization relative to the resources used in the production process. Productivity: The level of goods or services produced by an organization relative to the resources used in the production process. Resource Levels: The relative amounts of various resources held by an organization such as Inventory, Equipment and cash. Resource Levels: The relative amounts of various resources held by an organization such as Inventory, Equipment and cash.

7 Profitability: The ability of an organization to earn revenue dollars beyond the expenses necessary to generate the revenue. Profitability: The ability of an organization to earn revenue dollars beyond the expenses necessary to generate the revenue. Manager Performance & Attitude: The Quality of managerial performance and the rate at which managers are developing personally. Manager Performance & Attitude: The Quality of managerial performance and the rate at which managers are developing personally. Worker Performance & Attitude: The Quality of non management performance and such employees feelings about their work. Worker Performance & Attitude: The Quality of non management performance and such employees feelings about their work. Social Responsibility: The obligation of business to help improve the welfare of society while it strives to each organizational objectives. Social Responsibility: The obligation of business to help improve the welfare of society while it strives to each organizational objectives.

8 Characteristics of High Quality Organizational Objectives: Managers should develop organizational objectives that are specific. Managers should develop organizational objectives that are specific. Managers should set organizational objectives that require a desirable level of effort. Managers should set organizational objectives that require a desirable level of effort. Managers should establish organizational objectives that are reachable. Managers should establish organizational objectives that are reachable. Managers should establish organizational objectives that are flexible. Managers should establish organizational objectives that are flexible. Managers should establish organizational objectives that are measurable. Managers should establish organizational objectives that are measurable. Managers should develop organizational objectives that are consistent in the long run and the short run. Managers should develop organizational objectives that are consistent in the long run and the short run.

9 The Process of Establishing Organizational Direction: Step 1: Reflecting on the Results of an Environmental Analysis: Data should be drawn from all organizational environment levels – The general, operating, and internal environment. Step 1: Reflecting on the Results of an Environmental Analysis: Data should be drawn from all organizational environment levels – The general, operating, and internal environment. Step 2: Developing an Appropriate Organizational Mission: An Appropriate Organizational Mission is one that reflects the organizational environment and thereby increases the probability of the organization’s long term survival. Step 2: Developing an Appropriate Organizational Mission: An Appropriate Organizational Mission is one that reflects the organizational environment and thereby increases the probability of the organization’s long term survival. Step 3: Establishing Appropriate Organizational Objectives : Objectives that are consistent with an appropriate mission, must be formulated. Step 3: Establishing Appropriate Organizational Objectives : Objectives that are consistent with an appropriate mission, must be formulated.

10 Analyzing Environmental Trends: Studying relevant trends over several years can result in a better understanding of factors that influence organizational success. Developing Objectives for the Organization as a whole: Profitability Objectives: Are organizational targets that focus on the ability of an organization to earn revenue dollars beyond the expenses necessary to generate the revenue. Profitability Objectives: Are organizational targets that focus on the ability of an organization to earn revenue dollars beyond the expenses necessary to generate the revenue. Guidelines for Establishing Profitability Objectives: They are generally established by Collecting and Analyzing information that compares specific organizational data to similar data for other organizations or groups of organizations. Guidelines for Establishing Profitability Objectives: They are generally established by Collecting and Analyzing information that compares specific organizational data to similar data for other organizations or groups of organizations.

11 Developing a Hierarchy of Objectives: The purpose of establishing a hierarchy of objectives is to ensure that each significant segment of the organization knows what role it must play on both a long term and a short term basis, in order for the organization to reach its over all objectives. Developing Individual Objectives: Individual objectives are targets that specific people within an organization are attempting to reach. Individual objectives are designed so that accomplishing each one contributes to the accomplishment of the broader objectives of the department.

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