Corporate Objectives: A quantifiable statement of a business' goals which should include measurable targets.
Functional Objectives: A quantifiable statement of a department's goals which should enable it to contribute to the achievement of the business objective.
- Functional objectives should NOT conflict with each other!
Functional Strategy: The plan by which the department intends to achieve its functional objectives on a day-to-day basis.
- Should be realistic and clear.
- Should NOT conflict with any other functional strategies.
- Specific - No confusion about what is required.
- Measurable - A quantifiable goal is clear.
- Agreed - Agreed upon by all people involved.
- Realistic - Should be attainable.
- Time Specific - So progress can be measured.
Financial Objectives: The monetary goals a business sets itself to achieve in a given period of time, often a financial year.
Possible Financial Objectives include:
- Cash Flow Targets: A financial objective focused on maintaining a healthy cash balance.
- Cost Minimisation: The process by which business' attempt to maximise profits by keeping costs low.
- ROCE Targets: The minimum percentage return a business strives to achieve from the capital employed in business activities.
- Shareholder's Returns: The financial rewards to shareholders in return for their investment; this can include dividends paid and increased share value.
- Satisficing: Aiming to achieve a satisfactory level of profit.
Internal Influences on Financial Objectives:
- Characteristics of the Firm (Size/Status/Age)
- Owners (Number of Owners or Directors/Their motives)
- Sector (Primary/Secondary/Tertiary)
External Influences on Financial Objectives:
- Competitor's Actions (Pricing Strategies, etc)
- Economic Conditions (Boom/Slump)