BBA Principles Management Mission Objectives Study Material Notes
Table of Contents
BBA Principles Management Mission Objectives Study Material Notes: Mission and purpose formulation of mission vision and mission a comparison objectives characteristics of mission statement a comparison hierarchy of objectives role of objectives setting guidelines for objective setting Examples of poor objective setting :
BBA Social Ethical Issues Management Study Material Notes
Mission and Objectives
Setting of organisational objectives in the starting point of managerial actions. Since organisations are deliberate and purposive creations, they have some objectives; the end results for which they strive. These end results are referred to as ‘mission’, ‘purpose ‘objective’. ‘goal’, ‘target’, etc. Many times, these terms are used interchangeably as all these denote end results. However, there are differences in the context in which these terms are used. As we shall see later in this chapter, the end results are arranged in a hierarchy. On the one extreme end, there may be enduring reasons why an organisation exists; on the other extreme end, there may be specific results that an individual in the organisation achieves in a specified period. Therefore, the end results have to be specified by different terms in the context of these two extreme ends and in between. This contextual difference among various terms is important in understanding their nature relevent for managerial actions. From planning point of view, an organisation must define why it exists. how it justifies that existence, and when it justifies the reasons for that existence. The answers of these questions lie in the organisation’s:
1 mission and purpose.
2. long-term objectives, and
3. time-bound objectives.
Mission and Purpose
Mission and purpose are often used interchangeably, though at theoretical level, there is difference between the two. Mission has external orientation and relates the organisation to the society in which it operates. A mission statement helps the organisation to link its activities to the needs of the society and legitimise its existence. Purpose is also externally focused but it relates to that segment of the society to which it serves; it defines the business which the company will undertake. We may consider the mission and the purpose of Hindustan Lever Limited to visualise this difference. About its mission, the company states that:
Our purpose in Hindustan Lever is to meet the everyday needs of people everywhere-to anticipate the aspirations of consumers and customers and to respond creatively and
Thus, mission of the company says what it can do for the country (society in general) while purpose suggests how this contribution can be made. However, in general practice, mission and purpose are either used interchangeably or jointly. For example, Drucker has taken this stand while defining mission and purpose. He says:
An organisation’s mission when expressed in managerially meaningful terms, indicates exactly what activities the organisation intends to engage in now and in futuresuggests something specific about what kind of organisation it is and is to become. It depicts the organisation’s business character and does so in ways that tend to distinguish is! organisation from other organisations. Mission sets forth principles and concept foundation upon which the organisation reacts and the nature of the business in which plans to participate. Organisational mission, defined properly, offers guidance to managers in developing sharply focused, result-oriented objectives, strategies, and policies. Therefore, a detailed understanding of organisational mission is the starting point for rational managerial action and for the design of its strategies. Managerial effectiveness tends to begin with clarity of mission with an accurate, carefully delineated concept of just what the organisation is trying to do and why.
A key feature of organisation’s mission is that its focus must be external rather than internal. For example, Drucker has the following suggestion:
Mission Objectives Study Material
FORMULATION OF MISSION
Organisational mission encompasses the broad aims of the organisation; it defines what for the organisation strives. Therefore, the process of defining mission for any organisation can be best understood by thinking about it at its inception. Truly speaking, an organisation’s mission lies in the basic philosopy of those who create and manage the organisation as shown in figure .
Key Decision Makers’ Philosophy and Vision. Philosophy of a person consists of an integrated set of assumptions and beliefs about the way things are, the purpose of the activities, and the way these should be. The philosophy of a person has its origin in two premises-fact premises and value premises. Fact premises represent our descriptive view of how the world behaves. They are drawn from research findings and our experiences. Value premises represent our view of the desirability of certain goals and activities. Every person has philosophy in some form or other which defines what one wants to become or achieve and behaves accordingly. For example, Dhirubhai Ambani had inherent desire of being number one industrialist of India and he took all steps to fulfil his desire by making Reliance Industries, of which he was promoter, to make number one company in private sector.
Vision is the mental perception of the kind of environment a person desires to create within a broad time horizon and the underlying conditions for the actualisation of the perception. Vision, then, defines the specific steps that should be taken.
Organisational Philosophy and Vision. Like a person, an organisation has its philosophy and vision. These philosophy and vision are derived from the philosophy and vision of key decision makers, particularly of promoters. In fact, a person wants to achieve things which he values most. In many cases, however, he cannot achieve these alone because of his limitations. Such limitations are established by either his biological capacity or the environmental factors he faces. In order to overcome these limitations, the person organisations. At the initial stage of the organisation, decision making tends to be cena and alfected by the philosophy and vision of promoter who acts as key decision make When the organisation grows to a level at which centralised decision making does not work effectively, it is decentralised but the core of decision making remains based on key decision makers’ philosophy and vision.
Organisational philosophy and vision, taken together, define organisational mission in the forms of desires, beliefs, and assumptions to the following form:
1 The product and service offered by the organisation can provide benefits at least equal to its price.
2.The product or service can satisfy the needs of the customers not adequately served by others presently.
3. Technology used in producing product or service will be cost and quality competitive.
4. The organisation can grow and be profitable than just survive in the long run with the support of various constituents.
5. The organisation will create favourable public image which will result in contributions from environment.
6. Entrepreneur’s self-concept of the business can be communicated and adopted by employees and stakeholders.
7. The organisation will be able to satisfy the entrepreneur’s needs and aspirations which he seeks to satisfy through the organisation.
At the intial stage, the above elements go into mission formulation. As the organisation grows or is forced by competitive forces to alter its product, market, and technology, there may be need for redefinition of the mission. However, the revised mission will reflect the same set of elements as the original-like type of product to be offered, type of customer to be served, type of technology to be employed, growth of organisation, favourable public image, self-concept of entrepreneur, and needs and aspirations of entrepreneur, though in modified form.
Mission Objectives Study Material
Vision and Mission: A Comparison
At this stage, it would be worthwhile to discuss about vision and visionary organisation because, sometimes, vision and mission are used interchangeably with the result, proper emphasis is not put on organisational vision. Vision represents the imagination of future events and prepares the organisation for the same. Thus, vision represents the challenging portrait of what the organisation would be in future. It implies that the organisation should create projections about where it should go and what major challenges lie ahead. On the basis of six-year study by Collins and Porras, they have concluded that companies may be grouped into two categories judged on the basis of success of long-lasting high performance. These are visionary companies and comparison companies. A visionary company is characterised by the following features:
1 A visionary company holds a distinctive set of values from which it does not deviate.
2. The company expresses its core purpose in enlighted terms which provideschallenges for actions. This core purpose should not be confused with company’s business purpose or strategy and should not be simply a description of the company’s product lines.
3. The company develops a visionary scenario of its future, decides actions accordingly. and implements these. Collins and Porras have provided guidelines to develop a visionary company wing proceed according to following steps:
4. Push with relentless honesty to define what values are truly central.
5. If you come with five or six, start over. Chances are you are confusing core values (which do not change) with operational practices, business strategies, and cultural norms (all open to change).
6. After you have drafted a preliminary list of core values, ask this question about each one: “If the circumstances changed and penalised us for holding this core value, would we still keep it?”
7. If you can’t honestly answer yes to the question, then this value is not a core value and should be dropped. After all, if markets change, companies should not change values to match markets. Rather, they should change markets. The finest example of a visionary Indian company is that of Reliance Industries which has occupied number one position in Indian private sector within a very short span of time. Others which may be considered in this category are Infosys Technologies. Wipro, Hindustan Lever to name a few.
Based on the above discussion and definition and components of organisational mission, we find that vision and mission are two different connotations. While vision places emphasis on visionary long-term concept of organisation with very high level of sense of achievement, mission deals mostly with how the organisation will interact with various stakeholders, the products/services it offers, and the way these are offered. While every company has its mission, either implicitly or explicitly, every company cannot become a visionary company. In order to make this distinction more clear, we produce vision and mission of Tata International in Exhibit
Mission Objectives Study Material
Characteristics of Mission Statement
Every organisation has mission either defined explicitly or may be deduced from the actions of its top management. For a large organisation, where its members do not have face-toface contact, explicit mission statement is desirable as it serves the purpose of communicating to the members about the corporate philosophy, identity. character, and image which govern their behaviour in the organisation. Further, section of the society dealing with the organisation knows well in advance as how to interact with the organisation. Therefore, while framing the mission statement, following points should be taken into consideration so that it serves the purpose for which it is prepared:
1 Mission should be clear, both in terms of intentions and words used.
2. It should be feasible, neither too high to be unachievable, nor too low to demotivate the people for work.
3. It should be precise but self-explanatory, neither too narrow so as to restrict the organisation’s activities, nor too broad to make itself meaningless.
4. It should be distinctive, both in terms of the organisation’s contributions to the society and how these contributions can be made.
Objectives
Objectives are more precise as compared to mission and used to specify the end results which an organisation wants to achieve. However, there are two problems in giving the precise definition of objectives. First, goals and objectives are used interchangeably, though there are some differences between the two. Second, the end results, expressed as objectives, may be time-specific or without this specification. Therefore, objectives are defined in different ways. For example, McFarland has defined objectives in quite broad term which is as follows:
We can define objective as the intended end result that an organisation desires to achieve over varying periods of time. Because of time variation, objectives may be specified in different ways in which long-term objectives are supported by short-term objectives. Based on the definition of objective, we can derive its following features:
1 Each organisation, or group of individuals, has some objectives. In fact, organizations or groups are created basically for certain objectives. Members in the organization or group try to achieve these objectives.
2. Objectives may be broad or they may be specifically mentioned. They may pertain to a wide or narrow part of the organisation. They may be set either for the long term or for the short term. For example, the basic objective of a business organisation may be to earn profit. This may be quite a broad objective. In order to achieve this broad objective, some specific objective may be set, for example, how much profit and in which period. Thus, general objectives may be translated into operative objectives to provide definite action.
3. Objectives may be clearly defined or these may not be clear and have to be interpreted by the behaviour of organisational members, particularly those at top level. However, clearly defined objectives provide clear direction for managerial action.
4. Objectives have hierarchy. At the top level, it may be broad organisational purpose which can be broken into specific objectives at the departmental level. From departmental objectives, units of the department may derive their own objectives. This is possible because organisation is created by combining people into sections, departments, divisions, etc. All of them try to achieve organisational objectives and, at each level, a unit may contribute to the fulfilment of tasks assigned to it. Thus, a hierarchy of objectives is created.
5. Organisational objectives have social sanction, that is, they are created within the social norms. Since organisations are social units, their objectives must conform to the general needs of the society. Various restrictions on organisational objectives are put through social norms, rules, and customs.
6. An organisation may have multiple objectives. For example, Hindustan Lever Limited, under the chairmanship of T. Thomas (during 1973-80) formulated the following objectives:
(1) to expand and diversify in the area of chemicals;
(i) to continue to control costs and improve productivity very rigorously:
(iii) to build up management skills for future growth;
(iv) to utilise R&D more effectively in creating new business opportunities;
(u) to build a strong Board balancing the advantages of decentralised profit responsibility against the advantages of centralised controls on personnel, finance, and technology:
(vl) to communicate more openly and purposefully, internally as well as externally: and
(vit) to develop succession to the Board and to Chairmanship. It can be emphasised that many of these objectives are functional objectives; many of these objectives are intertwined and interrelated. Sometimes, many of the objectives may be even incompatible. This happens because over a period of time.! many interest groups exert their pressure on organisational objectives. For example economic and social objectives of an organisation may be incompatible; the achievement of one may be at the cost of the other at one point of time, while other time, both can be integrated.
7. Organisational objectives can be changed: old objectives may be replaced by new ones. It is possible because organisations are free to set their objectives within the overall social norms. Since objectives are formulated keeping in view the environmental factors and internal conditions, any change in these may result in change in objectives. For example, in response to various changes in the social environment, the objectives of YMCA have been transformed from religion and spirituality to recreation and physical exercise. Similarly, the Red Cross which was originally formed to hold itself in readiness in the war or any calamity to help the people found itself underemployed after World War I and lost members’ contributions, and public esteem. The Red Cross subsequently added another objective-that of preserving and improving public health.
Mission Objectives Study Material
Objectives and Goals: A Comparison
Objectives and goals are the end results which an organisation strives for. Since there may be different ways in expressing end results like market leadership (a qualitative measurement), or a certain percentage of increase in sales in a particular year (a quantitative measurement), the question is: for which result the term objective should be used and for which result the term goal should be used. This problem arises because these two terms are used in variety of ways, many of them are conflicting.
First, these terms are used interchangeably meaning one and the same thing. Therefore, there is no difference between the two. To make distinction between long-term and shortterm orientations, these prefixes are used either with objectives or goals. Second, some authors use goals as the long-term results which an organisation seeks to achieve and objectives as the short-term results. Third, some writers reverse the usage referring to objectives as the desired long-term results and goals as the desired short-term results. This latter view is, however, more prevalent and we will take this view in our discussion. From this point of view. Ackoff has defined both the terms as follows:
Thus, objectives and goals defined in this way convey two different concepts. The distinction between these two concepts is important because management needs both. The difference between objectives and goals may be drawn in terms of the following four dimensions:
1 Time Frame. Objectives are timeless, enduring, and unending: goals are temporal, timephased, and intended to be superceded by subsequent goals. Because objectives relate to the ongoing activities of an organisation, their achievement tends to be openended in the sense of not being bounded by time. For example, the survival objective of a business organisation is never completely attained since failure is always a future possibility.
2. Specificity. Objectives are stated in broad, and general terms, dealing with matters of image, style, and self-perception. These are aspirations to be worked in the future. Goals are much more specific, stated in terms of a particular result that will be accomplished by a specific date. In the above example, survival as an objective is not very specific because it leads to different interpretation of the state of survival. On the other hand, goals can be expressed in terms of say achievement of 10 per cent growth in the net sales in the next year. This is more specific and time bound.
3. Focus. Objectives are usually stated in terms of some relevant environment whi external to the organisation; goals are more internally focused and carry importa implications about how resources of the organisation are utilised or will be u sed future. Therefore, objectives are more generalised statements like maintaining market leadership, striving continuously for technological superiority, etc. A goal may imply a resource commitment requiring the organisation to use those resources in order to achieve the desired outcomes.
4. Measurement. Both objectives and goals can be stated in terms which are quantitatively measured but the character of measurement is different. Generally, quantitative objectives are set in relative terms. For example, Reliance Industries has put its objectives like this: to acquire top position among the Indian companies. This objective may not be achieved in any one year, but it is timeless and externally focussed, providing a continuing challenge for the company. Quantitative goals are expressed in absolute terms. For example, a company has stated its goal to achieve 10 per cent growth in its sales in the next year. The achievement of this goal can be measured irrespective of environmental conditions and competitors’ actions.
Mission Objectives Study Material
HIERARCHY OF OBJECTIVES
Organisational objectives form a hierarchy ranging from the broad air to specific individual objectives. The process of assigning a part of a mission to a particular department and then further subdividing the assignment among sections and individuals creates a hierarchy of objectives. The objectives of each sub-unit contribute to the objectives of the larger unit of which it is a part. In fact, the organisation itself can be thought of as a social unit and, as such, its objectives are the extension of the objectives of the society. This can be explained in terms of end-means chain which suggests that what is a means for one unit may be an end for another unit. For example, if accomplishment of the overall objectives is the responsibility of top management in the organisation, acquisition of the requisite means may be an end for the next lower level. In order to achieve this sub-objective, sub-means are necesary. Obtaining these sub-means then becomes the responsibility and consequently the objective of still lower level. This process goes on till a decision can be drawn on the existing product or programme available in the organisation’s environment. This is presented in Figure .
Mission Objectives Study Material
Top-down Approach and Bottom-up Approach
Hierarchy of objectives can be explained in two approaches: top-down approach and bottom-up approach. Understanding of this phenomenon is essential because a question arises whether objectives should be set at the top and communicated lower down the line or it is in reverse direction. In the top-down approach, at the extreme top of the hierarchy is the purpose which has two dimensions. First, there is the purpose of the society such as requiring the organisation to contribute to the welfare of the people by providing goods and services at the reasonable cost. Second, there is the purpose of the business which may be the ultimate objectives of the business such as what an organisation would like to be. For example, mission might be described as the basic philosophy of the organisation. However, the distinction between purpose and mission is not very obvious and are often used synonymously. At the next level of the hierarchy, overall organisational objectives as specified by various strategies and policies are defined. These lead to specify overall objectives in terms of quantitative standards. These objectives are further carried into divisional, departmental, and individual objectives. At individual level, two types of objectives exist: performance of individuals which contributes to the achievement of organisational objectives and personal objectives of individuals which they want to satisfy while working in the organisation. At each level of objectives, managers of different levels are involved. For example, overall objectives are formulated by top management. It also sets objectives for all key-result areas where performance is necessary to achieve organisational objectives. Middle-level managers are involved in the setting of key-resultarea objectives, divisional objectives, as well as departmental objectives. The primary concern of lower-level managers is the setting of objectives on the departmental and unit level as well as the objectives of their subordinates. Although in the hierarchy of objectives. individual performance and objectives have been shown at the bottom level, managers at the higher levels also should set objectives for their performance and development. Thus, in top-down approach, upper-level managers determine the objectives for their subordinates, while in bottom-up approach, subordinates initiate the setting of objectives for their position and present them to their superiors.
There is a controversy whether an organisation should use the top-down approach for setting the objectives or it should use bottom-up approach. Proponents of top-down approach suggest that the total organisation needs direction through organisational objectives provided by the top management which may include owners of the organisation. Proponents of the bottom-up approach, on the other hand, argue that top management needs to have information from lower levels in the form of objectives. Subordinates are more likely to be motivated and committed by the objectives which they initiate. While both approaches have certain positive and negative aspects, in order to take the advantages of both, a combination of the both is followed. To what extent both will be combined depends on situations such as size of the organisation, organisational culture, leadership styles of managers, etc.
Mission Objectives Study Material
ROLE OF OBJECTIVES
Every organisation has some objectives, either specified or unspecified. Clearly defined objectives govern behaviour of organisational members, and as such, every organisation should specify its objectives clearly. However, contingency approach recognises that in some situations, either it may not be possible to set specific objectives or it is not desirable to set objectives. For example, contingency approach suggests that:
Such situations require directional objective setting which identifies preferred style of action for the organisation or individual and an arena for activities. The emphasis switches from carefully formulating what objective is to be accomplished to consideration of a manager’s thrust. This approach is more flexible than traditional objective-setting approach and suggests that under three conditions, it is not desirable or possible to set objectives: (1in the formative period of an organisation’s development when it is too early to set objectives: (11 when the environment in which the organisation operates is unstable or uncertain owing to fast social, economic, technological, legal, or other changes; and (ii) when members cannot build enough trust or agreement to decide upon a common objective.
No doubt, in these situations, it may not be very desirable or possible to set objectives, but not all situations are like this. Specific objectives are appropriate in cases marked by the following conditions:
1 Managers want to narrow the focus and efforts of organisational members;
2. The environment is relatively stable and certain;
3. There are severe time and resource limitations; and
4. Organisational members require more specific conditions as a result of low tolerance
for ambiguity and uncertainty. Objectives should be specified because they perform a number of functions. For example, Drucker maintains that objectives are essential in all key areas where performance and results directly contribute to the growth and survival of business for enabling managers to: (1) organise and explain the whole range of business phenomena by such objectives: () verify the objective in actual business operation; (ii) predict employee behaviour: (w) vouchsafe the soundness of decisions; and (U) improve their performance. The major functions and contributions of objectives are as follows:
1 Defining an Organisation. Every organisation works in an environment consisting of several forces. These forces provide both opportunities and threats. In order to take the best possible from the environment, it must define itself, that is, what kind of company it is, or what kind of business it is in. This relates the organisation with its environment. For example, the following descriptions provide the kind of company each is or the business it is in:
Such a definition of the company in relation to its environment provides a clear thinking for the type of efforts the company should make so that it achieves its objectives. The failure to define the nature of the company based on its objectives and environment leads! to confusion about the way in which the company wants to move.
2. Directions for Decision Making. Objectives provide the directions for decision making in various areas of the organisation’s operation. The objectives set the limits and prescribe the areas in which the managers can make decisions. Since there is no ambiguity about the ends to be achieved, managers are quite clear about the expectations which the organisation has from its functions. From this point of view, clearly specified objectives serve a number of purposes: (0 Clear definition of objectives encourages unified planning.
3. Performance Standards. Objectives provide standards against which performance of the organisation, its units, sub-units, and individuals can be measured. Without performance standards which are derived from the objectives, there cannot be any meaningful control activities in the organisation. Such control measures not only ensure the achievement of organisational objectives by taking corrective actions, if needed, but also put a psychological pressure on those who are responsible for achieving the organisational objectives.
4. Basis for Decentralisation. Decentralisation includes assigning decision-making authority to lower-level people, thereby a subordinate is given considerable leeway in deciding to perform his work. Decentralisation is necessary for large-size organisations. However, independent decision-making authority to subordinates may lead to disintegration of the organisation unless there is a clear indication of the contributions of each unit towards the realisation of common objectives. Objectives indicate the contributions to be made by each unit for tying them effectively and allowing the managers concerned to exercise their individual skills and initiative.
5. Integrating Organisation, Group, and Individual. Clearly specified objectives may provide integration of organisation and its various groups and individuals. An organisation cannot exist apart from its individuals, and various groups associated with it such as creditors, customers, etc. If the objectives are clear, these will communicate the relationship between the organisation and various groups and individuals. Therefore, the individuals and groups can better be integrated because they have clear basis for dealing with the organisation.
Mission Objectives Study Material
Objective Setting
Virtually all organisations have a formal, explicitly recognised, legally specified organ for setting the initial objectives or their amendments. Generally, top management determines the overall objectives which the members of the organisation unite to achieve. In some
