Setting Objectives

The managerial purpose of setting objectives is to convert the vision and mission into specific performance targets. Objectives reflect managements aspirations for company performance in light of the industrys prevailing economic and competitive conditions and the companys internal capabilities. Well-stated objectives must be specific, as well as quantifiable or measurable. Concrete, measurable objectives are managerially valuable for three reasons: (1) they focus organizational attention and align actions throughout the organization; (2) they serve as yardsticks for tracking a companys performance and progress; and (3) they motivate employees to expend greater effort and perform at a high level. For company objectives to serve their purpose well, they must also meet three other criteria: they must contain a deadline for achievement, and they must be challenging, yet they must be achievable.

Q1. Companies set strategic objectives

A. to achieve a company's strategic vision.

B. because they are more difficult to achieve and harder to measure than financial objectives.

C. to target outcomes that indicate a company is strengthening its market standing, competitive position, and future business prospects.

D. to help managers track an organization's true progress better than financial objectives.

E. to indicate to employees that strategic objectives always take precedence over financial objectives.

Q2. Why is it important to set financial objectives?

A. To overtake key competitors on such important measures as net profit margins and return on investment.

B. Without adequate profitability and financial strength, the company's ultimate survival is jeopardized.

C. To convince shareholders that top management is acting in their interests.

D. To translate the company's business model into action items.

E. To indicate to employees that financial objectives always take precedence over strategic objectives.

Q3. A company sets financial and strategic objectives

A. to determine a company's short-term and long-term financial strength.

B. to establish the direction toward which an organization needs to be headed.

C. to help direct managers in deciding what the company's strategic intent should be.

D. to support, but not conflict with, the performance targets of lower-level organizational units.

E. to adapt the vision and mission to specific performance targets.