10 Questions
What is the primary focus of strategic objectives?
External market standing and competitive position
What is an example of a financial objective?
Increasing annual revenues by X percent
Which of the following is NOT a characteristic of strategic objectives?
Focused on internal operations
What is the primary difference between financial and strategic objectives?
Internal vs external focus
Which of the following is an example of a strategic objective?
Winning a specific market share
What is the primary goal of financial objectives?
To increase revenue and profitability
Which of the following is a characteristic of financial objectives?
Related to financial performance metrics
What is the relationship between financial and strategic objectives?
They are complementary and interconnected
Which of the following is NOT a financial performance metric?
Market share
What is the primary focus of financial objectives?
Internal operations and financial performance
Study Notes
Short-Term and Long-Term Objectives
- Short-term objectives focus on quarterly and annual performance improvements to satisfy near-term shareholder expectations.
- Long-term objectives consider what needs to be done now to achieve optimal long-term performance and help pose a barrier to overemphasizing short-term results.
Good Strategic Performance
- Good strategic performance is a leading indicator of a firm's increasing capability to deliver improved future financial performance.
- Current financial results are lagging indicators and do not assure the development of competitive capabilities for delivering better financial results in the future.
Balanced Approach to Objective Setting
- A balanced scorecard approach strives to place a balanced emphasis on achieving both financial and strategic objectives.
- This approach tracks measures of both financial performance and the competitiveness of its market position.
Characteristics of Well-Stated Objectives
- Objectives should be specific, clear, and unambiguous, leaving no room for misinterpretation.
- Objectives should be measurable in some way, allowing progress to be tracked and evaluated.
- Objectives should be challenging enough to motivate individuals or teams, but also realistic and achievable.
- Objectives should have a deadline or time frame for completion, creating a sense of urgency and focus.
Types of Objectives
- Financial Objectives: Communicate top management's goals for financial performance, focused internally on the firm's operations and activities.
- Strategic Objectives: Are the firm's goals related to market standing and competitive position, focused externally on the competition.
Examples of Objectives
- Financial Objectives: Increasing annual revenues, annual increases in after-tax profits, annual increases in earnings per share, etc.
- Strategic Objectives: Winning a specific market share, achieving lower overall costs than rivals, overtaking key competitors on product performance or quality, etc.
Learn about the importance of short-term and long-term objectives in business, including their focus on quarterly and annual performance improvements.
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