In this lesson you learned that a balanced approach to setting objectives involves Financial and Strategic objectives. You also learned that financial objectives are lag indicators while strategic objectives are lead objectives.
3. “Objectives are a company’s
performance targets. It is the specific
results a business owner or
management wants to achieve.”
Thompson et al.
4. The need for a balanced approach to
The most widely used framework for balancing
financial and strategic objectives is known as the
It is a method for linking financial performance
objectives to specific strategic objectives that derive
from a company’s business model.
5. The need for a balanced approach to
The balanced scorecard approach provides
employees with clear guidelines about how their
jobs are linked to the overall objectives of the
This is essential so that employees can contribute most
productively and collaboratively to the achievement of
the company’s goals.
6. The need for a balanced approach to
In 2010, nearly fifty percent of global company’s
used a balanced scorecard approach to measuring
strategic and financial performance.
Examples of company’s that have adopted a balanced
scorecard approach to setting objectives and measuring
performance include: SAS institute, UPS, Ann Taylor
Stores, Fort Bragg Army Garrison, Caterpillar, Daimler
AG, Hilton Hotels, Susan G, Komen for the Cure, and
7. Examples of Company objectives.
Increase same store sales by 2-4%.
Expand credit revenue by $25-$35 million while also reducing associated
expenses by $10-$20 million as a result of lower bad dept expenses.
Continue moderate store growth by opening three new Nordstrom stores,
relocating one store and opening 17 Nordstrom Racks.
Find more ways to connect with customers on a multichannel basis, including
plans for an enhanced online experience, improved mobile shipping
capabilities and better engagement with customers through social networking.
Improve customer focus: “ Most important we continue to do everything in our
power to elevate our focus on the customer.
8. Examples of Company objectives.
Increase operating income from $917 million to $1.6 billion.
Increase operating income from international tire division from $899 to $1,150
Increase operating income from North American division from $18 million to
Reduce the percentage of non-branded replacement tires sold from 16 percent
to 9 percent.
Improve brand awareness in Mexico and increase number of retail outlets in
China from 735 to 1,555.
Increase fuel efficiency of automobile and track.
9. Examples of Company objectives.
Accelerate top-line growth.
Build and expand our better-for-you snacks and beverages and nutrition
Improve our water use efficiency by 20 percent per unit of production.
Reduce packaging weight by 350 million pounds.
Improve our electricity-use efficiency by 20 percent per unit of production.
Maintain appropriate financial flexibility with ready access to global capital and
credit markets at favorable interest rates.
10. Example Strategic and Financial objectives prevalent in most
Financial Objectives Strategic Objectives
An x percent increase in annual revenues Winning an x percent market share
Annual increases in after-tax profits of x percent Achieving lower overall cost than rivals
Annual increase in earnings per share of x percent Overtaking key competitors on product performance or
quality or customer service
Annual dividend increases of x percent Deriving x percent of revenues from the sale of new products
introduced within the past five years
An x percent return on capital employment (ROCE) or return
on shareholders’ equity investment (ROE)
Having broader or deeper technological capabilities than
Increased shareholder value in the form of an upward-
trending stock price
Having a better-known or more powerful brand name than
Bond and credit ratings of x Having stronger national or global sales and distribution
capabilities than rivals
Internal cash flows of x dollars to fund new capital
Consistently getting new or improved products to market
ahead of rivals.
11. Congratulations! You’ve completed lesson 2.
Recap: In this lesson you learned that a balanced approach to
setting objectives involves Financial and Strategic objectives. You
also learned that financial objectives are lag indicators while
strategic objectives are lead objectives.
Now click Complete and then Next for Chapter 3.