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BUSINESS POLICY
BBA-VI SEMESTER
UNIT-II
Syllabus of Unit II
Responsibilities and tasks of top management: objective of
business characteristics, Classification ,types of objectives and
their overall hierarchy
Setting of objectives ,key areas involved
Roles & Responsibilities of Management
Top level managers work at the top of organization and guide strategy and
planning:
1) Top level managers consist of board of Directors,Presidents,Vice-presidents
CEO, General Managers and senior Managers.
2) They develop goals, strategic plans, company policies and make decisions
about the direction of the business.
3) Top managers need to have more conceptual skills than technical skills.
They understand how competition, politics and social trends affect
organizational effectiveness.
4) Responsible for controlling and overseeing the entire organization.
5) They do not direct the day to day activities of the firm but develop
goals, strategic plans, Company policies and make decisions.
6) Perform various top administrative functions.
7) Perform Managerial Skills- Conceptual skills, Interpersonal Skills, Technical
Skills
8) They prepare long term plan of the organization
9)Maximum authority and Responsibility of Organization
10)Spend more time in planning /thinking /Decision Making and organizing
11)Other basic functions-
planning,organising,staffing,directing,controlling,Motivation and
Communication.
12) Important Roles performed by a Top Management-
Interpersonal Roles, Informational Roles and Decisional Roles.
Role of a manager
• Manager perform different roles. Formal authority give rise to three
informational roles:-
I) Interpersonal Role
Figurehead Role-
Leader Role
Liaison Role
ii)Informational Role
Monitor role
Disseminator Role
Spokesman Role
iii)Decisional Role
Entrepreneurial Role
Disturbance Handler Role
Resource Allocator Role
Negotiator Role
Objectives
• Objectives may be defined as “ those ends which the organization seeks to
achieve by its existence and operations.”
• Objectives make the goals operational. Objectives form the basis for the
functioning of an organization.
• Objectives may be Tangible or Intangible.Tangiable objectives include
achievement of materially quantifiable targets or goals.Intangiable
objectives include factors like brand or company image ,employee morale
etc.
• Objectives should not be static, they should be dynamic. That is ,changes
in the environment or changes in the organizational strengths and
weaknesses may call for modifications to objectives.
• Following are the examples of objectives;
- To improve the communication system to hold regular staff meeting and
publish a newsletter
- To cross the 20,000 crore mark in turnover of soaps.
- To make available the employment to 100 people every year
Characteristics of Objectives
1.Objectives should be understandable-because objectives play an important
role in strategic management and are put to use in a variety of ways, they
should be understandable to those who have to achieve them.
2.Objectives should be Concrete and Specific –To say that “our company
plans to achieve a 12% increase its sales” is certainly better than stating that
“our company seeks to increase its sales”.
3.Objectives should be related to a Time Frame-If the first statement given
above is restated as “our company plans to increase its sales by 12 %by the
end of 2 Years", it enhances the specificity of the objective.
4.Objectives should be Measurable and Controllable
5.Objectives should be Challenging-Objectives that are too high or too low
are both demotivating and ,therefore should be set as challenging but not
unrealistic levels.
Factors affecting Objectives
• According to Glueek,who asserts that objectives are formulated by the top
managers in a firm, the choice of objectives are affected by three factors,
namely,
1. Forces in the Environment-There are number of environmental factors
which influence business decisions. For Example, an external factor like
the government policy may affect the objectives of a Company.
2. Internal Forces- Formulation of objectives is affected also by the
internal factors or the realities of the enterprise’s resources and
internal power relationships .Enterprise’s resources are undoubtedly a
factor which decides the objectives.
3. The value system of the Top Executives-The value system of the top
executives affect the formulation of objectives. For Example, the Article
of Association of TATA Iron and Steel Company(TISCO) was amended at
the initiative of the powers that be to incorporate the provision
regarding the company’s social and moral responsibilities to the
customers ,employees,shareholders,society and the local community.
Classification of Objectives
• 1. Primary Objectives: These are the objectives for which a company has
been started. Every business aims to earn more and more profits out of its
working. Primary objectives are related to the company and not to
individuals. Earning of profits out of providing goods and services to the
customers is the primary objective of a company. The goods and services
are provided as per the requirements of customers. Earning profits
through customer satisfaction helps in earning goodwill. The production of
goods and services as per determined targets will be achieved through
individual goals of employees in the organization.
• 2. Secondary Objectives: These objectives help in achieving primary
objectives. The targets are identified and efforts are made to increase
efficiency and economy in the performance of work. The goals dealing
with analysis, advice and interpretation provide support to goals directed
by primary objectives. The primary goal of earning profits through
providing goods and services will be achieved if there is a plan to add new
products in the market at regular intervals. The goal of adding new
products will be a secondary goal which will help in achieving the primary
objective.
.
• 3 Individual Objectives:
These are the goals which individual members in an organization try to
achieve on daily, weekly, monthly or yearly basis. These objectives are
achievable as subordinate to primary and secondary goals. Most of the
individual objects are economic, psychological or non-financial rewards
which an individual tries to achieve by using resources of time, skill and
effort. An individual tries to satisfy his needs and desires by working in an
organization. In order to motivate individuals for raising their
performance, organizations offer varied incentives.
4. Social Objectives:
These are the goals of an organization towards society. These include the
obligations required by the community, government agencies etc. These
also include goals intended to further social, physical and cultural
improvement of the society. Social obligations of business has become
essential these days. Business has to produce goods and services by taking
into consideration health requirements of people. There are expectations
that business should also spend a part of its profits for the welfare of
community.
Within the organization there are three levels of objectives
Step 1 Environmental Analysis- The first step should reflect on the results of
environmental analysis. Environmental analysis should provide managers with
adequate information and data for reflection. The data and information from all
levels of environment –general,specific,operating and internal-should be collected.