8 Key Areas to Set Management System Objectives

Peter Drucker believed that the survival of the company was at risk when managers emphazied only the profit objective because this single objective emphasis encourage managers to take action that will make money today with little regard for how a profit will be made tomorrow.

8 key areas in which managers should set management system objectives are:

1. MARKET STANDING: Management should set objectives indicating where it would like to be in relation to its competitors.                                                                                                         
2. INNOVATION: Management should set objectives outlining its commitment to the development of new methods of operation.                                                                                             
3. PRODUCTIVITY: Management should set objectives outlining the target levels of production.                                                                                                                                                     
4. PHYSICAL & FINANCIAL RESOURCES: Management should set objectives regarding the use, acquisition, and maintainence of capital and monetary resources.                                              
5. PROFITABILITY: Management should set objectives that specify the profit the company would like to generate.                                                                                                                               
6. MANAGERIAL PERFORMANCE & DEVELOPMENT: Management should set objectives that specify rates of worker productivity as well as desirable attitudes for workers to possess.                                                                                                                                                  
7. WORKER PERFORMANCE & ATTITUDE: Management should sset objectives that specify rates of worker productivity as well as desriable attitudes for workers to possess.           
8. PUBLIC RESPONSIBILITY: Management should set objectives that indicate the company's responsibilities to its customers and socity and the extent to which the company intends to live up to those responsibilities.

CHARACTERISTICS OF PLANNING

Thie sections in this part discuss the following topics:

1. Definition of Planning
2. Purposes of Planning
3. Advantages and Potential disadvantages of planning
4. Primacy of Planning

DEFINING PLANNING:

Planning is the process of determining how the organization can get where it wants to go, and what it will do to accomplish its objectives.

Planning is the systematic development of action porgrams aimed at reaching agreed business objectives by the process of analysing, evaluating, and selecting among the opportunities which are forseen.

PURPOSES OF PLANNING:

The protective purpose of planning is to minimize risk by reducing the uncertainities surrounding business conditions and clarifying the consequences of related management actions.

The affirmative purpose is to increase the degree of organizational success.

The fundamental purpose of planning, however, is to help the organization reach its objectives.

PLANNING: ADVANTAGES & DISADVANTAGES

A vigorous planning program produces many benefits.

First, it helps managers to be future oriented. They are forced to look beyond their everyday problems to project what situations may confront them in the future.

Second, a sound planning porgram enhances decision coordination. No decision should be made today without some idea of how it will affect a decision that might have to be made tomorrow.

The planning function pushes managers to coordinate their decisions.

Third, planning emphasizes organizational objectives. Because organizational objectives are the starting points for planning, managers are continually remind of exactly what their organization is trying to accomplish.

DISADVANTAGES:

The downside is that if the planning function is not well executed,planning can have several disadvatnages for the organization.

e.g.: An overemphasized planning program can take up too much managerial time. Managers must strike an appropriate balance between time spent on planning and time spent on organizing, influencing, and controlling.

PRIMACY OF PLANNING:

Planning is the primary managerial function- the one that precedes and is the absis for the organizing, influencing and controlling functions of managers.

Only after manaers have developed their plans can they determine how they went to structure their organization, place their people and establish organizational controls.

FIRST STEP : PLANNING

SECOND STEPS: ORGANIZING, INFLUENCING, CONTROLLING

RESULTS: ACHIEVING OBJECTIVES

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STEPS IN THE PLANNING PROCESS:

The planning process consists of the following 6 steps:

1. State Organizational Objective
2. List alternative ways of reaching objectives
3. Develop premises on which to base each alternative
4. Choose the best alternative for reaching objectives
5. Develop plans to pursue the chosen alternative
6. Put the plans into action.

ORGANIZATIONAL OBJECTIVES:

Organizational objectives are the targets toward which the open management system is directed. Organizational input,process and output all exist to reach organizational objectives.

Properly developed organizational objectives reflect the purpose of the organization.

ORGANIZATIONAL PURPOSE:

Organizational Purpose is what the organization exist to do, given a particular group of customers and customer needs. If an organization is accomplishing its objectives, it is accomplishing its purpose and thereby justifying its reason for existence.

Organizations exist for various purposes and thus have various types of objectives.

Therefore, its objectives are aimed at furnishing this assistance. The primary purpose of a business organization, in contrast, is usually to make a profit.