Setting Objectives

Read the overview below and complete the activities that follow.

The managerial purpose of setting objectives is to convert the vision and mission into specific performance targets. Objectives reflect management$$s aspirations for company performance in light of the industry$$s prevailing economic and competitive conditions and the company$$s internal capabilities. Well$-$stated objectives must be specific, as well as quantifiable or measurable. Concrete, measurable objectives are managerially valuable for three reasons:

$(1)$ they focus organizational attention and align actions throughout the organization;

$(2)$ they serve as yardsticks for tracking a company$$s performance and progress; and

$(3)$ they motivate employees to expend greater effort and perform at a high level.

For company objectives to serve their purpose well, they must also meet three other criteria: they must contain a deadline for achievement, and they must be challenging, yet they must be achievable. The goal of this exercise is for you to understand the importance of setting both strategic and financial objectives.

Before completing this exercise, be sure to review Chapter $2,$Charting a Company$$s Direction,$$ specifically, the section entitled $$Stage $2$: Setting Objectives.$$

Sources: $$Pi$$ch under Fire,$$ The Economist, December $8,2005$; Chris Bryant and Richard Milne, $$Boardroom Politics at Heart of VW Scandal,$$ Financial Times, October $4,2015$; Andreas Cremer and Jan Schwartz, $$Volkswagen Mired in Crisis as Board Members Criticize Piech,$$ Reuters, April $24,2015$; Richard Milne, $$Volkswagen: System Failure,$$ Financial Times, November $4,2015.$

A company sets financial and strategic objectives