Nathalie Escobar
Principles of Mgmt
Professor Moy
May 20, 2008
Discuss briefly the areas for establishing objectives in most organizations.
In management, the basics of planning consist of objectives which have to be set before a
course of action takes place. Objectives are statements which outline what the organization is
trying to achieve. Objectives also give an organization and its members direction and purpose.
Objectives in organizations usually end up in one of four categories: profit oriented, service to
customers, employee needs and well-being, and social responsibility. However, there are ten
outlined areas for establishing objectives in which it is mostly in organizations.
The first area for establishing objectives in most organizations is profitability.
Profitability is used to measure the degree to which the firm is attaining an acceptable level of
profits. It is usually expressed in terms of profits before or after taxes, return on investment,
earnings per share, or profit-to-sales ratios. The second area for establishing objectives in most
organizations are markets, which are used to reflect the firm’s position in its marketplace.
Markets are expressed in terms of share of the market, dollar or unit volume in sales, or niche
industry. The third area for establishing objectives is productivity. It is used to measure the
efficiency of internal operations. Productivity is expressed as a ratio of inputs to outputs, such as
the number of items or service produced per unit of time.
The fourth objective is called the product which describes the introduction or elimination
of products or services. It is expressed in terms of when a product or service will be introduced
or dropped. The fifth area for establishing objectives is financial resources. It is used to reflect
goals relating to the funding needs of the firm. Financial resources are expressed in terms of
capital structure, new issues on common stock, cash flow, working capital, dividend payments,
and collection periods. The sixth objective is called physical facilities. It describes the physical
facilities of the firm. The physical facilities are expressed in terms of square feet of office or
plant space, fixed costs, units of production, or similar measurements. The seventh area for
establishing objectives is research and innovation which reflects the research development or
innovation aspirations of the firm. It is usually expressed in terms of dollars to be expended. The
eighth objective is called organization structure. It is used to describe objectives relating to
changes in the organizational structure and related activities. Organization structure is expressed
in terms in desired future structure or network of relationships. The ninth area for establishing
objectives is human resources. It describes the human resource assets of the organization. It is
expressed in terms of absenteeism, tardiness, number of grievances, and training. The final area
of establishing objectives is social responsibility. It refers to the commitment of the firm
regarding society and the environment. Social responsibility is expressed in terms of types of
activities, number of days of service, or financial contributions.