strategic-management

216 PART 3 • STRATEGY IMPLEMENTATION
FIGURE 7-2
The Stamus Company’s Hierarchy of Aims
DIVISION I
ANNUAL OBJECTIVE
Increase divisional
revenues by 40% this
year and 40% next year.
(Current revenues are
$1 million.)
R&D
annual objective
Develop two
new products
this year
that are
succesfully
marketed.
They serve as an important source of employee motivation and identification. They
give incentives for managers and employees to perform. They provide a basis for
organizational design. 2
Clearly stated and communicated objectives are critical to success in all types and
sizes of firms. Annual objectives, stated in terms of profitability, growth, and market share
by business segment, geographic area, customer groups, and product, are common in
organizations. Figure 7-2 illustrates how the Stamus Company could establish annual
objectives based on long-term objectives. Table 7-2 reveals associated revenue figures that
correspond to the objectives outlined in Figure 7-2. Note that, according to plan, the
Production
annual objective
Increase
production
efficiency
by 30% this
year.
Purchasing
Shipping
Quality Control
LONG-TERM COMPANY OBJECTIVE
Double company revenues in two years through
market development and market penetration.
(Current revenues are $2 million.)
DIVISION II
ANNUAL OBJECTIVE
Increase divisional
revenues by 40% this
year and 40% next year.
(Current revenues are
$0.5 million.)
Marketing
annual objective
Increase
the number
of salespeople
by 40 this
year.
Advertising
Promotion
Research
Public Relations
Finance
annual objective
Obtain
long-term
financing
of $400,000
in the next
six months.
Auditing
Accounting
Investments
Collections
Working Capital
DIVISION III
ANNUAL OBJECTIVE
Increase divisional
revenues by 50% this
year and 50% next year.
(Current revenues are
$0.5 million.)
Personnel
annual objective
Reduce
employee
absenteeism
from 10% to
5% this year.