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The Koran “Management’s job is not to see the company as it is... but as it can become.” John W. Teets
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Strategic objectives operationalize the mission statement. They provide guidance on how the organization can fulfill or move toward the organizational mission and vision
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Strategic objectives are an organization’s performance targets-the results and outcomes it wants to achieve. They function as yardsticks for tracking an organization’s performance and progress
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They help to channel employees throughout the organization toward common goals Challenging objectives can help to motivate and inspire employees throughout the organization to higher levels of commitment and effort They resolve conflicts when they arise Provide a yardstick for rewards and incentives
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Financial Strategic Objectives Nonfinancial Strategic Objectives Strategic Objectives
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Outcomes focused on improving financial performance Outcomes focused on improving long-term competitive business position Financial Objectives Strategic Objectives $
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X % increase in annual revenues X % increase annually in after-tax profits X % increase annually in earnings per share Annual dividend increases of X % Profit margins of X % X % return on capital employed (ROCE) Increased shareholder value Strong bond and credit ratings Sufficient internal cash flows to fund 100% of new capital investment Stable earnings during periods of recession
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Winning an X % market share Achieving lower overall costs than rivals Overtaking key competitors on product performance or quality or customer service Deriving X % of revenues from sale of new products introduced in past 5 years Achieving technological leadership Having better product selection than rivals Strengthening company’s brand name appeal Having stronger national or global sales and distribution capabilities than rivals Consistently getting new or improved products to market ahead of rivals
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Short-term objectives Targets to be achieved soon Milestones or stair steps for reaching long-range performance Long-term objectives Targets to be achieved within 3 to 5 years Prompt actions now that will permit reaching targeted long-range performance later
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Profitability Productivity Competitive position Employee development Employee relations Technological leadership Public responsibility
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Specific: there must be at least one indicator (or yardstick) that measures progress against fulfilling the objective Measurable: this provides a clear message to what needs to be accomplished Appropriate: it must be consistent with the vision and mission of the organization. Realistic: it must be an achievable target given the organization’s capabilities and opportunities in the environment. In essence, it must be challenging but doable. Timely: there needs to be a time frame for accomplishment of the objective. After all, as the economist John Maynard Keynes once said, “in the long run, we are all dead
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Acceptable Flexible Measurable Motivating Suitable Understandable Achievable
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Level 1 Level 2 Business-Level Managers Level 3 Functional Managers Level 4 Plant Managers, Lower-Level Supervisors Corporate Level Objectives Corporate-wide Strategic Vision Corporate Level Strategy Business Level Objectives Business Level Strategic Vision Business Level Strategies Functional Objectives Functional Missions Functional Strategies Operating Objectives Operating Missions Operating Strategies Corporate- Level Managers
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GENERAL MOTORS Strategic Goal and Objectives
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GM OBJECTIVE 2003 Global Objectives In 2003, GM established a global energy use reduction target of 10 percent and a global CO2 reduction target of 8 percent between 2000 and 2005 consistent with global goals for energy and water usage over this time period. The global energy use and CO2 targets have been met successfully.
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GENERAL MOTORS GOAL (2007) “ to take the lead in development and production of more fuel-efficient vehicles and the conversion to alternative power, such as electricity and hydrogen fuel cells, to power vehicles”, Larry Burns, vice president of research and development and strategic planning
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GM’S GOAL Fuel Efficiency, Zero Emissions
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- Building Community Capital - Engaging employees and Facilities - Improving Education - Generating Public Interest GM Green Annual Report
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GM GREEN PRODUCTS
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To be one of the top three banking companies in terms of market share in all significant markets we serve
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To achieve annual growth in earnings per share of 10% or better, on average A return on stockholders’ equity of 20-25% A return on capital employed of 27% or better Have at least 30% of sales come from products introduced in the past four years
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A company exhibits strategic intent when it relentlessly pursues an ambitious strategic objective and concentrates its competitive actions and energies on achieving that objective!
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Nike’s strategic intent during the 1960s was to overtake Adidas (which connected nicely with Nike’s core purpose “to experience the emotion of competition, winning, and crushing competitors”).
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When Yamaha overtook Honda in the motorcycle market, Honda responded with a warlike strategic intent: Yamaha wotsubusu “we will crush, squash, slaughter Yamaha”
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