Long term objectives are prepared from the mission statement of the organization on the basis of which all other activities depend. Long term objectives highlight the expected consequences that emerged from application of certain strategies. All the strategies of the Business Organization are formulated & implemented in the guidance of the long term objectives. These objectives are for longer period of time ranging from two to five years & this time frame should also be consistent for the resulting strategies.
Nature of Long Term Objectives
The nature of long term objectives is better explained from the following features.
- Should be quantitative
- Should be realistic
- Should be measurable
- Should be challenging
- Should be obtainable
- Should be hierarchical
- Should be according to other functional units of organization
There must be a time line that is associated with each objective. Moreover following are some of the forms of Long Term Objectives.
- Growth in sales
- Growth in assets
- Market share
- The nature & degree of diversification
- The nature & degree of vertical integration
- Social responsibility
- Earnings per share
The long term objectives should be clearly established and communicated. Following are some of benefits that are associated with the clear & effective development of long term objectives.
- Synergy is created between all the functional areas of organization
- Clear direction is provided that assist all the functioning of the organization.
- The exertion of activities are stimulated
- The resources are better allocated that generates more productive results
- The designing of jobs is made effective
There are separate long term objective for corporate, divisional & functional levels in an organization. But all of them should indicate the same direction. Managerial Roles and performances are measured through these objectives by comparing the actual performance of the managers with the standard performance level set in the light of these long term objectives.
There are many reasons that associate the success of the organization with the clearly established & communicated long term objectives. The first reason is that all the stakeholders of the organization identify & understand their roles keeping in view the future of the organization. Those mangers whose values & attitudes differ are motivated for consistent decision making in the organization. Almost every manager is involved in the strategy formulation process and gives his opinion in shaping the final strategy for the organization. When finalized strategy is formulated by consensus then there remains no element of conflict among different managers during the strategy implementation stage. The priorities in the organization are set by the long term objectives which further stimulate the exertion efforts so that the desired targets can be achieved. In fact the long term objectives serve as performance evaluation standard through which the performance of individual, group, department, division & overall organization is effectively evaluated. The designing of jobs function & organization of required activities for the performance of those designed jobs are based on the long term objectives of the organization. All the activities in the functional areas of the organization are directed towards some desired position. There is complete synergy among all the activities & employees of the organization when effective long term objective are developed & properly communicated.
More from Business Study Notes:- Strategic Management Process
When an organization lacks long term objectives, then there is no proper destination of that organization & all the activities in that organization lead it to some unknown direction. Moreover there is no single organization in this world that can become successful without development & communication of long term objectives. There may be any exceptional case where an organization may succeed without any long term objectives but this happens by accident. Otherwise success is always based on the hard work that is performed for the accomplishment of some specified objectives.
Not Managing by Objectives
All the management in the organization should be based on the objectives that are established by the strategists with the consent of other managers. But strategists should avoid the following points while thinking about the Management by Objectives.
- The management of the organization based on the extrapolation
- The management of the organization based on crises
- The management of the organization based on the subjective actions
- The management in the organization based on hope
There are certain alternative ways that are should be avoided in dealing “other than managing by objectives”. These alternative options are as follow.
- Managing by Extrapolation:
It is similar to the principle which shows that certain thing should not be fixed they are broken. This means that the management of the organization should perform its functions in the same ways continuously because everything is well & right.
- Managing by Crisis:
In this category there is a belief that the strategists that can solve problems are regarded as good strategist. There are numerous problems that are faced by organization indifferent functional areas so the strategists should apply their expertise & energy to solve all these arising problems. In crisis management, the management style is reactive in nature.
- Managing by Subjective:
This approach is based on the fact that no proper plan is available for the direction & guidance of the activities of the organization. The management should consider that something is beneficial for them & then perform in certain way that seems to be best.
- Managing by Hope:
This option is based on the fact that the future is uncertain and there should be attempt for the success. If the success is not availed with the first effort then there should be second & then third attempt that may guarantee success. Decisions are made on the basis of the element of “hope of success” which means that good results are generated because the luck is quite near to the organization.