Business Objectives: Short-Term and Long-Term
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Questions and Answers

What is the primary focus of strategic objectives?

  • Short-term goals and internal cash flows
  • Product innovation and market share
  • Financial performance and internal operations
  • External market standing and competitive position (correct)
  • What is an example of a financial objective?

  • Increasing annual revenues by X percent (correct)
  • Having a wider product line than rivals
  • Improving product quality
  • Winning a specific market share
  • Which of the following is NOT a characteristic of strategic objectives?

  • Focused on internal operations (correct)
  • Concerned with long-term goals
  • Focused externally on competition
  • Related to financial performance metrics
  • What is the primary difference between financial and strategic objectives?

    <p>Internal vs external focus</p> Signup and view all the answers

    Which of the following is an example of a strategic objective?

    <p>Winning a specific market share</p> Signup and view all the answers

    What is the primary goal of financial objectives?

    <p>To increase revenue and profitability</p> Signup and view all the answers

    Which of the following is a characteristic of financial objectives?

    <p>Related to financial performance metrics</p> Signup and view all the answers

    What is the relationship between financial and strategic objectives?

    <p>They are complementary and interconnected</p> Signup and view all the answers

    Which of the following is NOT a financial performance metric?

    <p>Market share</p> Signup and view all the answers

    What is the primary focus of financial objectives?

    <p>Internal operations and financial performance</p> Signup and view all the answers

    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.

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    Description

    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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