Setting goals translates the theoretical part – the development of a strategic vision and direction for the development of the company.
In the plane of practical application. Goals are defined results and outcomes that need to be achieved within a specified time frame. The experience of numerous companies and managers shows that in the competitive struggle the winner is the company that sets specific and measurable goals and vigorously pursues their implementation, and those who work under the motto “we will try, and then we will see” and “we will do everything in our power” lose.
A company’s business is guided only by goals that are quantifiable or measurable and contain specific values that need to be achieved. When setting goals, it is necessary to indicate who is responsible for achieving them; it is desirable not to use the words “achieving maximum profits”, “reducing costs”, “increasing efficiency”, “increasing sales”, which do not contain either quantitative or time boundaries. Bill Hewlett, one of the founders of Hewlett-Packard, said: “You can’t control what you can’t measure, … but everything that is measurable can be achieved” [35 p.93]. The precise definition of goals in measurable indicators with the appointment of those responsible for achieving these indicators at a set time, firstly, avoids the dispersion of efforts and determines the actions necessary to implement strategic decisions, and, secondly, contains indicators by which it is possible to judge the productivity and development of the company.
Goals must be set in every area where the result is important. Usually they talk about two key areas – financial activities and strategic activities. Achieving acceptable financial performance is vital, otherwise the financial condition of the organization will cause concern among creditors and shareholders, which will have a bad effect on the financing of new initiatives and threaten the very existence of the company. Achieving strategic goals is necessary to strengthen the competitiveness and position of the company in the market in the long term.
Examples of corporate goals:
General Electric (strategic goals): to become the most competitive company in the world; to be the best in each of our activities; to transfer all the company’s activities to a global scale; work on the Internet, become a global electronic company. McDonald’s (strategic goal) – to achieve one hundred percent customer satisfaction: every customer, in every restaurant, every day; Motorola – Financial Goals: To achieve annual revenue growth of 15% through self-financing; provide an average rate of return on assets at the level of 13-15%; to ensure an average rate of return on share capital at the level of 16-18%; achieve excellent financial reporting performance. Atlas Corporation (strategic goal) – “To become a low-cost medium-sized gold mining company, to produce at least 3735.5 kg of gold per year and to create a reserve of 424.5 tons.” [15 p.68-71, 40].
If a company does not increase its competitiveness and strengthen its position in the market, its achievements and financial stability are highly questionable.
In order to achieve the desired financial and strategic position, objectives in both areas should be defined. Financial objectives are financial results and results of activities, as well as income growth, the level of return on investment, dividend growth, stock price growth, sufficient cash flow, creditworthiness. Strategic objectives are related to increasing competitiveness and improving the market position and can be formulated, for example, as an increase in market share; ahead of competitors in terms of product quality, customer service, innovative developments, costs; improving the company’s reputation; improvement of the situation on the international market; leadership in the technological sphere; use of promising marketing opportunities. Ideally, the struggle for strategic goals contributes to the achievement of good financial results.
Both financial and strategic goals should be short-term and long-term. The short-term goals of the organization are usually ongoing improvements and results; long-term goals make the company think about what actions to take now in order to achieve good results in the future. When choosing between achieving short-term and long-term goals, priority is usually given to the latter. A company rarely succeeds if management focuses only on short-term goals [15 pp. 38–40].