Business objectives

Under corporate goals is understood in the business administration of the entrepreneurial activity underlying objectives. They are an expression of self-understanding and the right of a company. Taking the institutional organization concept here, is sometimes spoken of organizational goals.

As part of the incentive - contribution theory ( 1958) assumes that organizations have no original goals, but can the organization's goals attributed to the individual goals of the organization participants. This use to speak an organization to realize their individual goals (so-called instrumental thesis ).

Background

In a business goal is a future, compared to the current generally altered, desirable or desired state of a target itself - in the broader sense - it differs in that it is the result of economic decisions. The principles underpinning these decisions to reason can be different, such as the social economy (after Schmalenbach ) or the acquisition of business ( after Gutenberg ).

In order to align their activities to the business goals, businesses need a fixed internal order. The constitutive framework for this order is given by a corporate constitution. Such is usually not before writing, but still serves as a kind of " basic law " of the company; it then comes into the corporate culture expressed.

Against the background of a privately owned, according to the profit maximization principle ( economic activity for the purpose of profit) acting business profits or profitability striving for the modern theory of the firm, not as the only one, but to be regarded as the most important objective. Goals of non-profit organizations or Public authorities and offices require a separate study, for example, when it comes to the weight of the profit target.

The complexity of the subject is not allowed to make blanket statements about the importance of certain objectives in individual companies. It should be noted that in the corporate practice a wide range of destinations is present, depending eg on the particular legal form ( private or public - law) or the size of the company ( family business or large companies). ( See → typing of companies)

Generally one can say that increase with increasing size of a company and, consequently, an increasing number of actors and stakeholders, the quantity and quality of the goals of the organization. One then speaks often of the target pluralism. There arise target systems and target hierarchies.

Increasingly complex systems require more sophisticated investigation, it must be much more factors to be considered. Here "simple" corporate goals "higher" goals can evolve. The strategic management expands the inspection area at about terms such as the so-called operational purpose, the vision or mission, corporate philosophy and corporate mission statement and areas such as corporate policy, corporate governance and corporate culture.

In micro-enterprises from low complexity (few actors / stakeholders ) and correspondingly few interactions with the company ( small business environment ) is an investigation and scientific study of target systems, in the sense of classical business administration, usually does not occur.

Goal-setting and goal-setting

One objective is one of the basic operating decisions of an entity and is determined usually by the company management.

It was not until the advent of the decision-theoretic approach ( Edmund Heinen, 1968 ) and the system-theoretical approach ( Hans Ulrich, 1972) made ​​a thematization of the target formation in business possible in the German business administration.

Several interest groups influence on the objective, namely investors, market partners (customers, suppliers), employees, public authorities and social groups. Since about two-thirds of all businesses are sole proprietorships, must not be neglected individual driving forces. Corporate goals of smaller companies, where the owner at the same time holds the chief position be so strongly influenced by the private interests of the owner.

Smaller companies are systemically worse to capture as many of the models can not be applied to them. Less influence groups act on them, or you have their individual decisions less influence. Sociological and psychological approaches can be methodological individualism or Neobehaviorismus.

Objective functions

Objectives have various functions in the company. Corporate philosophy and purpose, for example, define the self-understanding of the company and thus offer employees the opportunity to identify with the mission statements of the company and other stakeholders have a clue " where we are headed " - orientation, identification, and motivation function.

Become goals to lower levels broken down, so concrete, then it is action goals or manuals - Command, control, evaluation or communication function.

Strategic planning is the joint and simultaneous determination of the goal content and measures / benchmarks for the goals. The strategic decisions influence the company's long-term success and long term. Strategy is defined as the fundamental, long-term behavior ( combination of measures ) of the companies towards their environment towards achieving the long -term goals.

Operational planning is the level of short-term business planning, is done in the implementation and monitoring of strategic planning. This requires a breakdown of strategic plans to the ( sub-) periods of short-term planning as well as an allocation to functional areas of the operational organization. The set of indicators corresponds to the information needs of the corporate functional areas. Each department head will work out in collaboration with his department -specific performance indicators.

Based on the motivational effects of goals lead by objectives ( management by objectives ) is often used as a management tool.

• See also: goal setting

Restrictions and limitations

The theory here underlying the company assumes that the actors of the company act rationally, eg in the form of a homo economicus ( theoretical model of a Nutzenmaximierers ). Such model assumptions allow indeed, represent elementary economic relationships, but are not really suitable for a detailed analysis. Just as asymmetric information, bounded rationality and opportunism are considered in order to arrive at a more realistic assumptions about the New Institutional Economics factors.

Even the garbage- model of the organization ( James March, 1972) points out that no precise information, objectives or measurement criteria but rather wrong / missing information and logically incompatible goals in a complex environment can be inscrutable.

Next, it is important how well the objectives described by the formal organization will be borne by the members. Depending on whether it permits the organizational commitment, arise alongside official organizational goals of the formal organization ( supported by the leadership hierarchy ) also departmental or group goals and objectives of each organization members (individual goals ).

Classification

A company has several business goals in the rule. The relevant literature provides a classification according to three target dimensions; Content, extent and time reference.

It is best to operationalize goals in terms of these dimensions (content, scope and time reference ) and thus to make it measurable.

• Example: Instead of the formulation: " We want to increase our profits ," the goal should be worded: " We want to increase our profit ( target content ) within a year ( time reference ) to 66% ( degree ) ".

Substantive dimension

Economic goals, formal or value goals are names for those goals that reflect the success of the entrepreneurial activity. This can be, for example financial ratios; therefore, they are particularly well measurable.

Foremost among these goals are the earnings and liquidity, as these are generally regarded as a necessary condition for the existence of business enterprises. You can continue to be based on many different success parameters: productivity, profitability, return on sales and return on investment. More formal objectives are: market power, job security, good working environment, image and preserve the environment.

Tangible goals or performance objectives are those objectives that relate to the specific actions of a company or a public institution in the provision of services, ie on the type, quantity, quality, location and the time of goods to be produced or services to be provided.

Tangible goals are aimed mostly after the formal goals.

• Service provision to meet demand ( overall objective)
• Production of certain products in certain quality
• Application of a particular manufacturing process
• Production of certain amount

Social objectives, human objectives, ecological objectives describe the intended behavior toward internal and external stakeholders ( employees, suppliers, customers, government, public). Because this dimension of content is not necessary directly for the economic survival of a company or do not generate immediate results, it is often regarded as secondary. Some components but also by laws, such as the regulation of working hours or of compliance with environmental protection requirements set.

Partial order is concerned, the corporate ethics.

In contrast to the formal goals are the tangible objectives, sub-objectives to achieve the formal target, such as the sale of a certain quantity of products.

Some authors limit is also a dichotomy in tangible goals and formal goals.

Temporal dimension

Here is the period for which the goal is to apply, or a date up to which a target is to be achieved, in the foreground. The classical classification is done in the short, medium and long -term goals; also referred to as operational, tactical and strategic goals. In the short term it often refers to a period of one year or less; rather the medium to two or three years. Long-term planning take place from 3 or 5 years.

Extent

The target extent describes the characteristics of a specific goal to be achieved. It contributes significantly to the quantification of which comes in the degree of target achievement expressed.

As dimensions are to name Extremisierung, Satisfizierung and fixation.

Objective relations

Objective relations to each other relations between several corporate objectives. The target relationships can be described in four ways.

• Complementary objectives

Complementary and supplementary means; this is the ideal relationship may be in the goals to each other, because the other one is automatically achieved or promoted by reaching or tracking of a target - you hit two birds with one stone, so to speak (see also synergy effect). Example: reduce Committee, reduce costs

• Competing goals

Goals that compete with each other, can not pursue the same time. Come to the one closer, removed automatically from the other.

• Indifferent / neutral targets

In today's highly - networked, globalized world, there is little corporate objectives that can be pursued independently of each other. That is, the neutral target relationship, in reality, virtually not found. A possible example would be the quality of working conditions and the amount of capital turnover.

• Antinome goals

Goals that completely exclude a fulfillment of another or several other goals. An example Increased awareness of a company as the target closes in savings in the advertising budget of the same company clearly.

Target structures

Especially for large companies (eg multinational corporations ), the systemic complexity increases considerably. This mostly leads that do not arise negligible trade-offs so that certain goals can not be pursued to the optimum extent or not at all. In these cases it may be necessary and useful to draw up a hierarchy of objectives.

To illustrate, most representations are chosen in a pyramid shape.

On one hand you can in a target pyramidal targets according to their relevance Sort ( objective A is more important than objective B).

On the other hand, can be set up also means-ends hierarchies. For example: profit ( overall objective), cost minimization (Via Point ), revenue maximization (via point ), increase productivity ( Target ), efficiency increase ( Target ). In this hierarchy type not only the priority of individual objectives is mapped, but overall objectives are substantiated by intermediate goals and sub-goals further and thus first offense instructions are given.