Formulating Strategic Objectives is very essential. A Strategic Objective is an organization target in which efforts are directed within a specific time frame. It is a statement of what is to be achieved within a given time frame. It is also the desired end result towards which all activities in an organization are aimed at.
Factors to consider when Formulating Strategic Objectives
The mission of the organization should be the first factor to consider when Formulating Strategic Objectives.
The environment in which the organization operates i.e. the influence of external factors such as market conditions legislation, political and economic trends have an influence on the desired end result.
The values held by management. Management values have an important influence on Formulating Strategic Objectives.
They may value from ethical standards to the position held on social welfare that is the cooperate social responsibility.
The management experience. This relates to the management experience of a specific market that they are used to providing for.
The strong and weak points of the business. The organization plans shouldn’t be made to expose the weak points of the business but instead exploit on the strength
The cost of each alternative should be weighed against the benefits offered when Formulating Strategic Objectives.
They provide specific direction to the activities of the organization i.e. from the foundation upon which decisions are made
Providing the direction for everyone in the organization is one importance of Formulating Strategic Objectives.
Affects other aspects of management i.e. Planning, organizing, leading and controlling.
Provide a benchmark for performance measurement
Provide a mechanism of control through provision of corrective measures
Provide motivation for people to achieve them especially if they are rewarded if they achieve them
Formulating Strategic Objectives form the basis of delegation of authority. Good objectives are helpful in effective delegation of authority
Areas of Formulating Strategic Objectives.
Market Position- This is one area for Formulating Strategic Objectives. It indicates the position the organization is striving to achieve relative to the competition (market objectives), market share, and customer level satisfaction.
Innovation- New products are required to achieve market objectives. Innovation indicates any changes to be made to improve the methods of conducting business. Management must decide whether it intends to lead in developing technologies and products or follow other companies.
Total Productivity- This indicates the level of products produced relative to the resources used in the production process. It indicates the level of goods and services produced through efficient use of resources available. Total productivity should be considered when Formulating Strategic Objectives.
Profitability- Profitability is another area for Formulating Strategic Objectives. Profits target should be explicitly stated in order to provide an evaluation and decision making criteria and also to make the development of other objectives possible.
Social Responsibility- This deals with organization obligation towards welfare of society i.e. obligations of business to improve the welfare of community and society in general.
Resource Levels – indicates the relative amounts of various types of resources such as physical and financial to be held by the organizations. These include building equipment, inventory material, and cash.
Personnel or Human Resource Objectives- this include management and development of employees attitudes and performance. It influences the level of org success.it is one of the arrears that need to be considered when Formulating Strategic Objectives.
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Characteristics of Formulating Strategic Objectives that are of high quality
Specific-When Formulating Strategic Objectives they should be specific. Managers should develop clear and well defined objectives indicating what should be accomplished, who should do it and within which time frame i.e. specific objectives eliminate confusion and ensure that members understand.
Achievable- Being achievable should be considered when Formulating Strategic Objectives. It should be within the capability of the organization i.e. shouldn’t be too high nor too low to achieve
Challenging- this will stimulate high standards of performance and encourages progress.
Flexible- Flexibility should also be considered when Formulating Strategic Objectives so as to be able to modify as needed.
Measurable- They should be measurable so as to evaluate their attainability.
Integrate- Both short and long run objectives i.e. the short term and long term objectives should be consistent and supportive of one another.
When Formulating Strategic Objectives for Businesses in Nairobi one should be consistent with the values of the organization so as to avoid conflict with one another and should be compatible with other departmental objectives.
They must be integrated with the reward system of the business so that it can provide the employee with a means of realizing both personal and business objective.
Cost effectiveness- Formulating Strategic Objectives for Businesses in Nairobi should be economical in the use of resources.
They must be geared towards achieving organization mission i.e. directly related to the mission.
There must be a period review of objectives. Management should also realize that planning is subject to certain regulation and should be revised from time to time.
Formulating Strategic Objectives must be time related or bound- must be achieved within a definite stated time period.