Examples of Managerial Objectives
Small-business management must achieve strategic objectives with limited resources. The objectives provide a company its identity, direct the organization's efforts and motivate employees. The objectives are the basis of managerial functions and the criteria incorporated in organizational controls. The manner in which managers accomplish such objectives varies from one company to another. However, a large majority of businesses, regardless of industry, company size or location, adopt profitability, productivity, survival and growth objectives.
Profit is a small-business manager's major incentive. Managers do what is necessary for a company's revenues to be sufficient not only to earn profits in the present, but the long term as well. Such leaders view profits as a means to finance company growth, provide employee benefits and finance the company's social responsibilities. In addition, managers view profits as a quantitative measure of a company's operational efficiency. Therefore, these leaders work to make the most of current revenue-generating business opportunities while identifying future profit-earning prospects. For example, a company might implement a new production line to manufacture custom products with less scrap or introduce new products and expand current markets. Business leaders also carefully manage expenses to increase profits. For example, a company might contract with lower-cost vendors or form a joint venture to control costs.
As a company’s use of resources becomes more efficient, the greater its productivity and profitability should become. As a result, management is concerned not only with output per man hour, but also the productive use of other resources as well. For example, management focuses on ways to make production, distribution and administration processes more efficient. In doing so, production cost per unit declines, which can lead to lower prices and a competitive advantage. A company also might become more productive by implementing materials requirements, planning to ensure required production materials are available as needed or instituting quality controls to minimize defect costs.
The primary intent of business is to grow market share, revenues and profits. As a result, a key managerial objective is to increase the sales of existing products and services in current markets. To do so, a company might implement a market penetration strategy by promoting a new use of a product or attempt to attract non-users and competitors’ customers to the company's brands. For example, customers use pegboard for tool storage in garages and craft supplies in a workroom. Managers may also support the development of new products that reflect current consumer demand, such as gluten-free foods, or develop new markets to achieve growth. For example, a company might promote the use of garden fixtures as home or holiday decor or offer computers and peripheral devices, which are traditionally manufactured using black exterior materials for corporate use, in neon colors for personal use
Managers recognize that a company survives only if it produces and distributes products at price greater than its variable and fixed costs. Therefore, company survival is a critical managerial objective. Managers must identify ways to fend off the negative effects of environmental issues, such as recession, changes in customer preferences and antiquated technology. Managers also also must avoid the negative effects of a lack of materials availability and issues with production facilities. If leaders are effective in meeting such changes in their operating environment, a company will recover its costs, meet its obligations to creditors, suppliers and employees, and remain a going concern. If not, the company will not survive.