Establishing organizational direction is thesecond step of strategic managementprocess, so there are two main indicators ofthe direction in which an organization ismoving to:-Mission ObjectivesOrganizational DirectionObjectives are the target theOrganization has chosenMission is the purpose.for why reason anorganization
Organizational mission is the purpose forwhich or reason why, an organization exist. ingeneral, a firm’s organizational missioncontains such information as what types forproducts or services the organizationproduces. To develop an appropriate organizationalmission, management should thoroughlyanalyze and consider information generatedduring the environmental analysis process.
Establishing an organizational mission is animportant part of management’s job, becausethe existence of a formally expressedorganizational mission generally makes it morelikely that the organization will succeed. Having an established and documentedorganizational mission accomplishes severalimportant things.
The kinds of information contained in missionstatements very somewhat form organization toorganization. Most mission statements seem to cover severalmajor topics, these topics either withinorganization or contained materials thataccompany it these may include: Company product or service Market Technology Public image Company objectives
This part outlines the role of organizationaldirection through the use of organizationalobjectives. Organizational objective is a target towardwhich the organization direct its efforts. The term objective should be used somesuggest using either “objectives” or “goals”, sothis term is used to refer to target that theorganization is attempting to reach.
the importance of establishing appropriateobjectives for an organization can not beoveremphasized. Objectives provide thefoundation for planning, organizing, motivatingand controlling. Without objectives and theireffective communication, behavior inorganizations can stray in almost any direction.
The organization have two different types ofobjectives, these are the following :1. Short run objectives: are targets that theorganization is attempting to reach withinone year or two years.2. Long run objectives: are targets that theorganization is trying to reach withinthree to five years.
Most organizations have focused in one primaryobjective: making a profit. Its important that the firm’s objectives should befocused on several areas, so there are eight key areasin which organizational objectives should be set as:1. Market standing2. Innovation3. Productivity4. resource levels5. Profitability6. Manager performance and development7. Worker performance and attitude8. Social responsibility
Organizational objectives exist in some form in virtually allmodern organizations, as well as high qualityobjectives, so these may include the following:1. Managers should develop organizational objectives that arespecific.2. Managers should set organizational objectives that requirea desirable level of effort.3. Managers should establish organizational objectives thatare flexible.4. Managers should establish organizational objectives thatare reachable.5. Managers should establish organizational objectives thatare measurable.6. Managers should develop organizational objectives that areconsistent in long run and short run.
The Process Of Establishing OrganizationalDirection are three major steps:-1) Reflecting on the results of an environmentalanalysis.2) Establishing an appropriate organizationalmission.3) Establishing an appropriate organizationalobjectives.
Like organizational mission, organizationalobjectives should reflect the environment withinwhich the organization operates. As indicatedearlier organizational objectives should change asthe organizational environment changes. Those whose establish organizational objectivesmust recognize that environmental trend are thentaken shape that will affect the future relevance ofthe objectives and odds of accomplishing them. Managers should keep track of innovations in orderto be aware of and react appropriately to anyimportant environmental trends that may emerge.
Profitability objectives are organizational targetsthat focus on the ability of an organization to earnrevenue dollar beyond the expenses necessary togenerate the revenue. Profitability objectives established in organizationscommonly include objectives related to return oninvestment, net profit margin, and return instockholder’s equity.
Net profit margin Return on investment orreturn on sales Return in stockholder’sequityNET PROFITSALESNET PROFITTOTAL ASSETSNET PROFITSTOCKHOLDERS EQUITYPROFITABILITY OBJECTIVES HOW TO CALCULATE
Hierarch Of Objectives as set of organizationalobjectives that include for the organization as awhole and corresponding sub objectives forsignificant segments of the organization. The purpose of establishing a Hierarch OfObjectives is to ensure that each significantsegment of the organization knows what role itmust play, on both a long- term and short-term basis, in order for the organization toreach its overall objectives.
Individual objectives are targets that specificpeople within an organization are attempting toreach, individual objectives are designed so thataccomplishing each one contributes to theaccomplishment of the broader objectives of thedepartment. The primary advantage of establishingindividual objectives is that they help individualworkers understand exactly what they areexpected to contribute to the development.