Target beginning in the activities of the organization. Mission Definition Process
The essence of goals in an enterprise
The goal is certain state relevant organizational characteristics, the achievement of which is desirable for the enterprise. All activities of the enterprise are focused on achieving goals.
Setting a goal can translate the strategic direction and vision of enterprise development into a specific task that is linked to the results of production activities. The goal represents the commitment of the management apparatus to achieve certain results over a specific period of time.
The process of constructing a hierarchy of goals of any organization is the determination of the goals of each stage (level) of the organization. Achieving these goals by departments individually should subsequently lead to the achievement of the overall organizational goal.
The hierarchy of goals in the organization is established in accordance with both long-term goals and short-term goals. To achieve logical completion, the hierarchy of goals in the organization is brought to the level of each individual employee. In this case, the organization's employees get an idea of what they need to achieve, as well as how the results of their work can affect the final result of the company's functioning, as well as to what extent and in what way the work of employees will contribute to achieving the goals of the entire companies.
Features of the hierarchy of goals in an organization
Any large enterprise, which has several different structural divisions and several management levels, has a certain established hierarchy of goals. This hierarchy of goals in an organization is a decomposition of top-level goals into lower-level goals.
As a result of the decomposition of higher-level goals into a lower-level goal (in the process of combining the goals of lower levels into a higher-level goal), it is necessary to construct a tree of goals.
First of all, it is necessary to determine the pre-established subordination of various goals, on the basis of which the interdependence “goal - means” is clearly fixed, determining which goals can practically act as means of achieving other goals.
Features of constructing goals in hierarchy
The specifics of constructing a hierarchy of goals in an organization are described as follows: the top-level goal will always be broad in nature and have a long-term time interval for achievement. The highest level goal should be formed taking into account the mission, detailing it as a system of specific indicators of a qualitative and quantitative nature, the implementation of which should be strived for.
The goal of a lower level is a specific means of achieving a goal of a higher level, while detailed correspondence of the goals of the adjacent level must be ensured. Short-term goals are based on and subordinated to long-term goals; with their help, the vector of the company’s activities for the near future can be determined. Short-term goals are set along the way to achieve a long-term goal. By achieving short-term goals, step by step, the enterprise strives towards achieving the established long-term goal.
The importance of hierarchy of goals in an organization
The hierarchy of goals in an organization is aimed mainly at forming the “coherence” of the company and orienting the activities of each division towards achieving a higher-level goal.
In the process of correctly constructing a hierarchy of goals in an organization, all departments, when achieving their own goals, are able to make a sufficient contribution to the achievement of overall corporate goals.
The company's objectives occupy an important place in the hierarchy of goals in the organization. Goals and objectives can be distinguished in accordance with the level within which they operate in the enterprise. Tasks can be attributed to the divisions of the enterprise and its branches separately. Objectives are more short-term in nature than goals, since they are directly related to the process of planning current activities. Often this fact leads to a multiplicity of tasks that are operational in nature and differ depending on the focus of the activity.
Examples of problem solving
EXAMPLE 1
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FEDERAL EDUCATION AGENCY
SECONDARY VOCATIONAL EDUCATION
VORONEZH STATE-INDUSTRIAL HUMANITIES COLLEGE
external environment goal tree mission
On the topic: Hierarchy of goals
Completed:
3rd year student,
group MH-272 Maltsev Dmitry
Checked by: Lyudmila Evgenievna Kretova
Voronezh 2010
Building a hierarchy of goals
He was the first to draw attention to the fact that the size and structure of firms’ activities are not determined by the mechanism of prices emerging in the market, but depend on other factors. “In firms there is a different organizing principle - the principle of hierarchy, according to which the distribution of resources is carried out in a directive way. What determines what activities a firm prefers to engage in itself and what it acquires from other firms?.. The firm and the market are alternative ways of organizing the same transactions.”
The number and variety of management goals and objectives requires a systematic approach to determining their composition. As a convenient tool tested in practice, you can use a model in the form of a tree of goals. By means of a tree of goals, their ordered hierarchy is described, for which a sequential decomposition of the main goal into subgoals according to the following rules:
the overall goal should contain a description of the final result;
when expanding the general goal into a hierarchical structure, they proceed from the fact that the implementation of the subgoals of each subsequent level is a necessary and sufficient condition for achieving the goals of the previous level;
when formulating goals at different levels, it is necessary to describe the desired results, and not the methods for obtaining them;
the subgoals of each level must be independent of each other and cannot be derived from each other;
The foundation of the goal tree should be tasks that represent the formulation of work that can be completed in a certain way within a specified time frame.
The number of decomposition levels depends on the scale and complexity of the goals set and on the organizational structure. An important point in goal setting is modeling not only the hierarchy of goals, but also their dynamics in terms of development over a certain period of time. When developing long-term plans for an enterprise, a dynamic model is used.
From the point of view of the logic of actions performed when setting Goals, we can consider that the process of setting goals in an organization consists of three successive stages. At the first stage, the results of the environmental analysis are comprehended, at the second stage the corresponding mission is developed, and, finally, at the third stage the goals of the organization are directly developed. Previously, issues related to environmental analysis and development of the organization's mission were discussed. Now let's look at the process of forming the goals of the organization.
A properly organized goal setting process involves going through four phases:
identification and analysis of trends observed in the environment;
setting goals for the organization as a whole;
building a hierarchy of goals;
setting individual goals.
First phase. The influence of the environment affects not only the establishment of the organization's mission. Goals are also very dependent on the state of the environment. Previously, when the issue of goal requirements was discussed, it was said that they should be flexible so that they can be changed in accordance with changes occurring in the environment. However, one should not conclude from this that goals should be tied to the state of the environment only through constant adjustment and adaptation to changes. Management must strive to anticipate the state of the environment and set goals in accordance with this anticipation. That is why it is very important to identify trends characteristic of the development processes of the economy, social and political spheres, science and technology. Of course, it is impossible to foresee everything correctly. Moreover, sometimes changes may occur in the environment that do not in any way follow from the revealed trends. Therefore, managers must be prepared to respond to unexpected challenges that the environment may throw at them. But nevertheless, without making trends absolute, they must formulate goals in such a way that these trends are reflected in them.
Second phase. When setting goals for the organization as a whole, it is important to identify which of the broad range of possible characteristics activities of the organization should be taken as the goals of the organization. Next, certain tools for quantitative calculation of the size of goals are selected. The system of criteria used to determine the goals of the organization is important. Typically, these criteria are derived from the organization's mission, as well as from the results of an analysis of the macroenvironment, industry, competitors and the organization's position in the environment. When determining the organization's goals, it takes into account what goals it had at the previous stage and how much the achievement of these goals contributed to the fulfillment of the organization's mission. Finally, the decision on goals always depends on the resources that the organization has.
Third phase. Establishing a hierarchy of goals involves defining such goals for all levels of the organization, the achievement of which by individual units will lead to the achievement of overall organizational goals. At the same time, the hierarchy should be built according to both long-term goals and short-term ones. The process of decomposing top-level goals into goals of lower levels, or the process of reducing goals of lower levels into goals of higher levels, involves the construction of a tree of goals, in which, depending on the established subordination of goals, a clear goal-means relationship is fixed. This dependence determines which goals in practice act as means to achieve other goals.
Fourth phase. In order for the hierarchy of goals within the organization to acquire its logical completeness and become a truly effective tool in achieving the goals of the organization, it must be brought to the level of the individual employee. In this case, one of the most important conditions for the successful operation of the organization is achieved: each employee, through his personal goals, is included in the process of jointly achieving the ultimate goals of the organization. Employees of the organization in such a situation get an idea not only of what they have to achieve, but also of how the results of their work will affect the final results of the organization’s functioning, how and to what extent their work will contribute to achieving the organization’s goals.
So, no company can survive in a competitive environment if it does not have clearly defined guidelines, directions that set what it strives for, what it wants to achieve in its activities. The goal principle in a company’s activities does not arise only because it needs to have guidelines so as not to perish in a changing environment. First of all, the goal principle in the activities of an organization arises because an organization is an association of people pursuing certain goals.
People create companies in order to solve their problems with their help. This means that from the very beginning, companies have a specific goal orientation. People enter organizations in order to obtain a certain result for themselves. And this also gives the organization a certain goal orientation. Finally, people from the external environment (customers, the public, business partners and the like) as well as those who own or work in the organization, pursuing their own goals when interacting with the organization, give its existence a certain direction and thereby develop the target principle in the organization’s activities. When we talk about the target principle in the behavior of the company and, accordingly, about the target principle in the management of the company, we usually talk about two components: mission and goals. Establishing both, as well as developing a behavioral strategy that ensures the fulfillment of the mission and the achievement of the company's goals, is one of the main tasks of top management and, accordingly, forms a very important part of strategic management.
The strategic management process begins with defining missions organizations. In the most general and at the same time in the most in-depth understanding, the role of the company’s mission is that it establishes a connection, orients in a single direction the interests and expectations of those people who perceive the company from the inside, and those who perceive it from the outside. Moreover, the mission allows you to orient or even subordinate the interests of people “internal” in relation to the organization to the interests of “external” people. By defining what the organization was created and exists for, the mission gives people's actions meaning and purposefulness, allowing them to better see and understand not only what they should do, but also why they carry out their actions. There is a broad and narrow understanding of mission.
It should be kept in mind that the mission statement should not depend on the current state of the organization. A mission is a strategic management tool that defines the organization's targets, which are important from the point of view of ensuring long-term competitive trends.
An analysis of the literature on strategic management shows that 65% of American firms and many non-profit organizations (for example, a police department, the Red Cross, a charitable organization, etc.) have a clearly stated mission. Many Russian companies have developed their missions, although among all currently operating domestic firms and enterprises, the percentage of Russian companies that base their work on the principles of strategic management is not very large. Many managers explain their reluctance to think strategically and plan promising development their organizations with high instability external environment and the inability to accurately predict the development of companies in Russia. However, the paradox is that strategic management began to develop precisely in connection with the growing uncertainty of the external environment and is intended to offer a management mechanism that will help the company adapt to such a situation most effectively and without significant losses. The mission of the organization plays an important role in this process.
So why is the mission formulated, what does it provide for the organization’s activities?
Firstly, the mission gives subjects of the external environment a general idea of what the organization is, what it strives for, what means it is ready to use in its activities, what its philosophy is, and the like.
In addition, it contributes to the formation or consolidation of a certain image of the organization in the representation of subjects of the external environment.
Secondly, the mission promotes unity within the organization and the creation of a corporate spirit. This manifests itself in the following:
The mission makes the overall goal clear to employees and
purpose of the organization. As a result, employees focus their actions in a single direction;
· the mission helps employees to make it easier
identify with the organization. For those employees who identify themselves with the organization, the mission serves as the starting point in their activities;
· the mission contributes to the establishment of a certain climate
in the organization, since, in particular, through it, the organization’s philosophy, values and principles that underlie the construction and implementation of the organization’s activities are communicated to people.
Thirdly, the mission creates the opportunity for more effective management of the organization due to the fact that it:
· is the basis for establishing the organization’s goals, ensures the consistency of the set of goals, and also helps develop the organization’s strategy, establishing the direction and acceptable boundaries of the organization’s functioning;
· gives a general approach to the distribution of organizational resources and creates a basis for assessing their use;
· expands the meaning and content of his activities for the employee and thereby allows the use of a wider range of motivation techniques.
The mission should be developed taking into account the following five factors.
· History of the company. Every company has a history of its goals, policies and achievements; The company should not make a sharp break with its past.
· The existing style of behavior, preferences and mode of action of owners and management personnel.
· Market environment.
· The resources she can bring to bear to achieve her goals.
· Certain business abilities and capabilities. An organization's goals should be based on what it knows how to do best.
A well-stated mission statement clarifies what the organization is and what it strives to be, and sets the organization apart from others like it. To do this, the transcript accompanying the mission must reflect:
· the company's targets, reflecting what the company strives for in its activities in the long term;
· the scope of the company’s activity, reflecting what product the company offers to customers, and in what market the company sells its product;
· the philosophy of the company, which is manifested in the values and beliefs that are accepted in the company;
· capabilities and methods of carrying out the activities of the company, reflecting what the strength of the company is, what its capabilities for survival in the long term are, in what way and with the help of what technology the company carries out its work, what know-how and advanced technology are available for this.
It is very important that the mission be formulated very clearly so that it is understood by all entities interacting with the company, especially all members of the company. At the same time, the mission should be formulated in such a way that it eliminates the possibility of misunderstandings, but at the same time leaves room for the creative and flexible development of the company (see Appendix 3).
If the mission sets general guidelines, directions for the functioning of the organization, expressing the meaning of its existence, then the specific final states that the organization strives for are fixed in the form of its goals, that is, in other words, target - this is the desired state of the system or the result of its activity, achievable within a certain time interval. The goals should reflect the development perspective of the system. The goals of the activities of socio-economic systems are largely determined by environmental conditions.
It is impossible to overestimate the importance of goals for a company.
Goals are the starting point for planning; they underlie the construction of organizational relationships; the motivation system used in the organization is based on goals; finally, goals are the starting point in the process of monitoring and evaluating the results of specific employees, departments and the organization as a whole.
For goals to have managerial value, they must be defined in quantitative and measurable terms and contain limit values that need to be achieved.
There are eight key spaces within which a firm defines its goals.
· Market position. Market goals can be to gain leadership in a certain market or its segment, increase the company's market share, or strengthen the competitive status of the company.
· Innovation. Targets in this area are related to the identification of new ways of doing business, the development of the production of new goods, and the use of new technologies.
· Productivity. A more efficient enterprise is one that produces products at a lower cost. For any enterprise, indicators such as labor productivity, energy intensity, and resource conservation are important.
· Resources. The need for all types of resources is determined and goals are formed regarding the expansion or reduction of the resource base, ensuring its stability, and reducing the enterprise’s dependence on one source of raw materials.
· Profitability. These goals are related to achieving a certain level of profitability, ensuring a given level of profitability, and are usually expressed quantitatively.
· Management aspects. Ensuring effective management is the goal of any organization focusing on the long term. Attracting outstanding managers to work, forming an appropriate organizational culture, the creation of management systems for activities in unforeseen situations are just some of the factors that affect the effectiveness of the management process.
· Staff. Goals regarding personnel may be related to maintaining jobs, ensuring a certain level of remuneration, improving working conditions and motivation, reducing staff turnover, and increasing the level of qualifications.
Social responsibility. Currently, most economists recognize that individual firms should focus not only on increasing profits, but also on developing generally accepted values. This idea is also the basis of the concept of socio-ethnic marketing, which has become widespread in last years. Being open system, the company must maintain contact with its environment, taking into account its influence and influencing it to create a favorable image of the company.
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Goals are the starting point for planning activities, goals are the basis for building organizational relationships..
Goals must be realistic and achievable, specific and measurable, mutually supportive, logical and motivated. Depending on the period of time required to achieve them, goals are divided into long-term and short-term. Long-term strategic goals (for a period of up to 5 years) should include medium-term tactical goals (for a period of a year), and these in turn - short-term operational goals (for a period of a month, a quarter).
There are four areas in which organizations set their goals:
1.In the area of income:
Profitability, reflected in profit, profitability, earnings per share; market position, described by market share, sales volume, market share relative to a competitor; productivity, expressed in costs per unit of production, material intensity, volume of products produced per unit of time; financial resources, described by indicators characterizing the capital structure, the flow of money in the organization, the amount of working capital.;
2.In the field of working with clients:
Work with customers, expressed in such indicators as speed of customer service, number of complaints from customers, etc.
3.In the area of working with employees:
Changes in organization and management, reflected in indicators that set targets for the timing of organizational changes, etc.; human resources, described using indicators reflecting the number of absences from work, staff turnover, employee training, etc.
4.In the sphere social responsibility:
Providing assistance to society, described by such indicators as the volume of charity, timing of charitable events, etc.
In any large organization that has several different structural divisions, a hierarchy of goals develops. The specificity of the hierarchical construction of goals in an organization is due to the fact that: - goals of a higher level are always broader in nature and have a longer time interval for achievement; - goals of a lower level act as a kind of means for achieving goals of a higher level.
The hierarchy of goals plays a very important role, since it establishes the “coherence” of the organization and ensures that the activities of all departments are oriented toward achieving top-level goals. If the hierarchy of goals is constructed correctly, then each division, achieving its goals, makes the necessary contribution to achieving the goals of the organization as a whole.
KPI- a system of indicators with which employers evaluate their employees. It has much in common with the conventional planned approach. With one major difference: the performance indicators of each individual employee are tied to the general KPIs of the entire company (such as profit, profitability or capitalization). The purpose of the system is to ensure that the actions of employees from different services are not contradictory and do not slow down the work of specialists from other departments. Everyone contributes to the common cause, works to achieve their goals and, as a result, receives bonuses for their implementation.
Topic 3. Classification, hierarchy of enterprise goals
organization of strategy development at the enterprise.
3.1. Classification, hierarchy of enterprise goals
Concept and types of goals
If the mission sets general guidelines, directions for the functioning of the organization, expressing the meaning of its existence, then the specific final state to which the organization strives at each moment in time is fixed in the form of its goals.
Goals - This is a specific state of individual characteristics of an organization, the achievement of which is desirable for it and towards which its activities are aimed.
The importance of goals for an organization cannot be overestimated. Goals are the starting point for planning activities, goals are the basis for building organizational relationships, the motivation system used in the organization is based on goals, and finally, goals are the starting point in the process of monitoring and evaluating the work results of individual employees, departments and the organization as a whole,
Depending on the period of time required to achieve them, goals are divided into long-term And short-term, In principle, the division of goals into these two types is based on the time period associated with the duration of the production cycle. Goals that are expected to be achieved by the end of the production cycle are long-term. It follows that in different industries there should be different time periods for achieving long-term goals. However, in practice, goals that are achieved within one to two years are usually considered short-term, and, accordingly, long-term are goals achieved in three to five years.
The division of goals into long-term and short-term is of fundamental importance, since these goals differ significantly in content. Short-term goals are characterized by much greater specificity and detail (who should do what and when) than long-term ones. Sometimes, if the need arises, intermediate goals are also set between long-term and short-term goals, which are called medium-term
Directions for setting goals
Depending on the specifics of the industry, the characteristics of the state of the environment, the nature and content of the mission, each organization sets its own goals, specific both in terms of a set of parameters of the organization, the desired state of which acts as the goals of the organization, and in the quantitative assessment of these parameters. However, despite the situational nature of fixing a set of goals, there are four areas in which organizations set their goals:
1) income of the organization;
2) work with clients;
3) the needs and welfare of employees;
4) social responsibility,
As you can see, these four areas concern the interests of all entities influencing the activities of the organization, which were mentioned earlier when discussing issues of the organization’s mission,
The most common areas along which goals are set in business organizations are as follows,
1. In the area of income:
* profitability, reflected in indicators such as profit margin, profitability, earnings per share, etc.;
* market position, described by indicators such as market share, sales volume, market share relative to a competitor, the share of individual products in total sales, etc.;
* productivity, expressed in costs per unit of production, material intensity, output per unit of production capacity, volume of products produced per unit of time, etc.;
“financial resources, described by indicators characterizing the capital structure, cash flow in the organization, the amount of working capital, etc.;
* the organization’s capacity, expressed in target indicators regarding the size of the capacity used, the number of units of equipment, etc.;
* development, production of a product and updating of technology, described in such indicators as the amount of costs for implementing projects in the field of research, the timing of commissioning of new equipment, the timing and volume of product production, the timing of introducing a new product to the market, product quality, etc. ,
2. In the area of working with clients:
* work with customers, expressed in such indicators as speed of customer service, number of complaints from customers, etc.
3. In the area of working with employees:
* changes in organization and management, reflected in indicators that set targets for the timing of organizational changes, etc.;
* human resources, described using indicators reflecting the number of absences from work, staff turnover, staff development, etc.
4. In the field of social responsibility:
* providing assistance to society, described by such indicators as the volume of charity, timing of charitable events, etc.
Hierarchy of goals
In any large organization that has several different structural divisions and several levels of management, there is hierarchy of goals, which is a decomposition of higher-level goals into lower-level goals. The specificity of the hierarchical construction of goals in an organization is due to the fact that:
* goals of a higher level are always broader in nature and have a longer time interval for achievement;
* goals of a lower level act as a kind of means to achieve goals of a higher level -
For example, short-term goals are derived from long-term ones, they are specified and detailed,<<подчинены>> they determine the organization’s activities in the short term, Short-term goals, as it were, set milestones on the way to achieving long-term ones goals. It is through achieving short-term goals that the organization moves step by step towards achieving its long-term goals -
The hierarchy of goals plays a very important role, since it establishes the “coherence” of the organization and ensures that the activities of all departments are oriented toward achieving top-level goals. If the hierarchy of goals is constructed correctly, then each unit, achieving its goals, makes the necessary contribution to achieving the goals of the organization as a whole -
Growth Goals
Some of the most important for strategic management are organization growth goals. These goals reflect the relationship between the rate of change in sales and profit of the organization and the industry as a whole. Depending on what this ratio is, the organization's growth rate may be rapid, stable, or contracting. According to these types of growth rates, a rapid growth target, a stable growth target, and a abbreviations.
Target rapid growth is very attractive, but also very difficult to achieve. In this case, the organization should develop faster than the industry. An organization, if there are all the necessary prerequisites for achieving this goal, should give preference to this particular growth goal. To cope with rapid growth, the management of the organization must have such qualities as a deep understanding of the market, the ability to select the most suitable part of the market and concentrate its efforts on this part of the market, the ability to make good use of the resources available to the organization, the ability to sensitively sense the passage of time and have good control over the processes occurring in the organization over time. In case of rapid growth of an organization, it is necessary to have experienced managers who know how to take risks. The organization's strategy must be formulated very clearly
Target stable growth assumes that when it is achieved, the organization develops at approximately the same pace as the industry as a whole. This goal does not imply expansion of the organization, but means that the organization seeks to maintain its market share unchanged,
Target reductions is set by an organization when, for a number of reasons, it is forced to develop at a slower pace than the industry as a whole, or even in absolute terms to reduce its presence in the market. Setting such a goal does not mean that crisis phenomena are occurring in the organization. For example, after a period rapid growth, there may be a need to reduce
One of the interesting features three listed growth goals. Being completely different in their focus, they can calmly, consistently replace one another, while there is no mandatory order in the pursuit of these goals -
Requirements for goals
Goals are absolutely necessary for the successful functioning and survival of an organization in the long term. However, if goals are incorrectly or poorly defined, it can lead to very serious consequences. negative consequences for the organization.
The extensive experience in setting goals accumulated in business allows us to identify several key requirements that correctly formulated goals must satisfy,
First, the goals must be achievable. Of course, the goals should include some challenge for employees. They should not be too easy to achieve. But they also should not be unrealistic, going beyond the limits of the performers. An unrealistic goal leads to demotivation of employees and their loss of direction, which has a very negative impact on the organization’s activities.
Secondly, goals should be flexible. Goals should be set in such a way that they leave room for adjustment in accordance with changes that may occur in the environment.
Thirdly, goals should be measurable. This means that goals must be formulated in such a way that they can be quantified or can be assessed in some other objective way as to whether the goal has been achieved , If goals are immeasurable, then they give rise to discrepancies, complicate the process of assessing performance results and cause conflicts,
Fourthly, goals should be specific, possessing the necessary characteristics so that it can be unambiguously determined in which direction the organization should move. The goal must clearly state what needs to be obtained as a result of the activity, in what time frame it should be achieved and who should achieve it - The more specific the goal, the it is easier to develop a strategy for achieving it. If the goal is formulated specifically, this makes it possible to ensure that all or the vast majority of the organization’s employees will easily understand it, and therefore know what awaits them ahead -
Fifthly, goals should be compatible. Compatibility implies that long-term goals are consistent with the mission, and short-term goals are consistent with the long-term. But hierarchical compatibility is not the only direction for establishing goal compatibility. It is important that the goals related to profitability and the establishment of competitive position, or the goals of strengthening a position in the existing market and the goals of penetrating new markets, the goals of profitability and charity. It is also always important to remember that compatibility requires a growth goal and a stability goal.
Sixth, goals should be acceptable for the main subjects of influence that determine the activities of the organization, and primarily for those who will have to achieve them.
When formulating goals, it is very important to take into account what desires and needs employees have. Taking into account the interests of the owners, who occupy a leading role among the subjects of influence on the organization and are interested in making a profit, management should nevertheless try to avoid focusing on obtaining large short-term profits when developing goals. He should strive to set goals that would provide greater profits, but preferably in the long term.
Since buyers (another subject of influence on the organization) currently play a key role for the survival of the organization, managers must take into account their interests when setting goals, even if they lead to a reduction in profits by reducing prices or increasing costs to improve the quality of the product. Also When setting goals, it is necessary to take into account the interests of society, such as the development of the local living environment, etc.
Setting Goals
Goal Setting Phases
From the point of view of the logic of actions performed when setting goals, we can consider that the process of setting goals in an organization consists of three successive stages. At the first stage, the results of the environmental analysis are comprehended, at the second, the corresponding mission is developed, and, finally, at the third stage, the results are directly developed. goals of the organization.
The process of forming organizational goals involves going through four phases:
1) identification and analysis of those trends that are observed in the environment;
2) setting goals for the organization as a whole;
3) building a hierarchy of goals;
4) setting individual goals -
First phase. The influence of the environment affects not only the establishment of the mission of the organization, Goals also greatly depend on the state of the environment. Earlier, when the issue of requirements for goals was discussed, it was said that they must be flexible so that they can be changed in accordance with changes occurring in the environment . However, one should not conclude from this that goals should be tied to the state of the environment only through constant adjustment and adaptation to changes. Management must strive to anticipate the state of the environment and set goals in accordance with this anticipation,
Second phase. When setting goals for the organization as a whole, it is important to determine which of the wide range of possible characteristics of the organization's activities should be taken as the goals of the organization. Next, certain tools are selected for quantitative calculation of the magnitude of goals. The system of criteria used to determine the goals of the organization is important. Typically, these criteria are derived from the mission of the organization, as well as from the results of an analysis of the macroenvironment, industry, competitors and the organization’s position in the environment. When determining the goals of an organization, it takes into account what goals it had at the previous stage and how much the achievement of these goals contributed to the fulfillment of the organization’s mission. Finally, the decision on goals always depends on the resources that the organization has.
Third phase Establishing a hierarchy of goals involves defining such goals for all levels of the organization, the achievement of which by individual divisions will lead to the achievement of overall organizational goals. Moreover, the hierarchy should be built according to both long-term and short-term goals. The process of decomposing top-level goals into goals of lower levels, or the process of reducing goals of lower levels into goals of higher levels, involves the construction of a tree of goals, in which, depending on the established subordination of goals, a clear goal-means relationship is fixed. This dependence determines which goals in practice act as means to achieve other goals -
Fourth phase, In order for the hierarchy of goals within the organization to acquire its logical completeness and become a really effective tool in the implementation of the entire organization, it must be brought to the level of the individual employee. In this case, one of the most important conditions for the successful operation of the organization is achieved: each employee is, as it were, included through his personal goals in the process of jointly achieving the ultimate goals of the organization. Employees of the organization in such a situation get an idea not only of what they have to achieve, but also of how the results of their work will affect the final results of the organization’s functioning, how and to what extent their work will contribute to achieving the organization’s goals,
Ways to Set Goals
Established goals must have the status of law for the organization, for all its divisions and for all members. However, immutability does not follow from the requirement that goals are binding. It was said earlier that due to the dynamism of the environment, goals can change. It is possible to approach the problem of changing goals in the following way: goals are adjusted whenever circumstances require it. In this case, the process of changing goals is purely situational in nature.
But another approach is possible. Many organizations carry out systematic proactive changes in goals. With this approach, long-term goals are established in the organization. Based on these long-term goals, detailed short-term goals (usually annual) are developed. Upon achieving these goals, new long-term goals are developed. At the same time, they take into account those changes that occur in the environment, and those changes that occur in the set and level of requirements put forward in relation to the organization by subjects of influence. Based on the new long-term goals, short-term ones are determined. upon achievement of which new long-term goals are again developed. With this approach, long-term goals are not achieved, since they change regularly. However, the organization constantly maintains a long-term goal orientation and regularly adjusts its course to take into account new circumstances and opportunities that arise.
One of the most important points, which determine the process of setting goals in an organization, is the degree of delegation of the right to make decisions on goals to the lower levels of the organization. As acquaintance with real practice shows, the process of setting goals in various organizations goes differently. In some organizations, goal setting is completely or largely centralized, while in other organizations there may be complete or almost complete decentralization. There are organizations in which the process of setting goals is intermediate between complete centralization and complete decentralization.
Each of these approaches has its own specifics, its advantages and disadvantages. So, in the case of complete centralization in setting goals, all goals are determined by the highest level of management of the organization. With this approach, all goals are subordinated to a single orientation, and this is a definite advantage. At the same time, this approach has significant disadvantages. Thus, the essence of one of these shortcomings is that at the lower levels of the organization there may be rejection of these goals and even resistance to their achievement,
In the case of decentralization, the process of goal setting involves, along with the upper and lower levels of the organization. There are two schemes for decentralized goal setting . In one, the process of setting goals goes from top to bottom. The decomposition of goals occurs as follows: each of the lower levels in the organization determines its goals based on what goals were set for the higher level. The second scheme assumes that the process of setting goals goes from bottom to top. In this case, lower levels set goals for themselves, which serve as the basis for setting goals at a subsequent, higher level,
As you can see, different approaches to goal setting differ significantly. However, the general thing is that the decisive role in all cases should belong to top management.
Forms of decision making
Forms of decision-making for setting goals can be divided into two large groups. The first group consists of such forms of decision-making for goals that are based on individual responsibility for decision- The second group consists of such forms of decision-making on goals that are based on a collective decision and collective responsibility.
The following forms of individual solutions can be distinguished:
* collegial;
* participative;
* "down up"
The authoritarian form of goal setting assumes that the decision is made individually by the leader based on the information available to him. Usually, specialists are involved in preparing information; they can also prepare solutions -
The collegial form involves discussing the issue of goals at a meeting of the board, which usually consists of responsible persons in the organization. However, as in the case of the authoritarian form, based on the results of the discussion, the decision is made individually by the leader.
The participatory form of decision-making on goals involves the establishment of a procedure for preparing and discussing options for decisions on goals, in which those employees who will subsequently directly carry out the decision are involved in this activity. The decision is made by management,
The procedure for deciding on goals “from the bottom up”, known as the ringi system, practiced in Japanese companies, assumes the following scheme: The decision is made by the executor, who sends his decision for approval to all divisions of the organization that will be involved in the implementation of this decision. Each of those agreeing on the decision expresses either agreement or disagreement. After this, in case of disagreement, the decision goes back down to the performer. In case of agreement, it goes to the next approval and, in the end, is approved by the manager -
In the case of a form of collective decision on goals, a group of people determines what goals the organization will pursue, and it also takes responsibility for the decision made on goals. It may seem that with this form of decision-making the level of objectivity is higher than in the case of an individual decision However, in the case of a collective decision, the level of irresponsibility is higher, which can lead to the establishment of goals that are inadequate to the conditions and capabilities of the organization.
Established goals determine where the organization should move. However, very often, the choice of how to go towards the goal depends on whether the organization will be able to successfully achieve the desired results.
3.2. Organization of strategy development at the enterprise
It is quite obvious that you can move towards the same goal different ways. For example, you can increase profits by reducing costs. But this can also be achieved by increasing the utility of the product produced by the organization for the consumer. Different companies, based on circumstances, based on capabilities and their strength, will accept various solutions about how they will solve this problem. The choice of method to achieve the goal will be a decision about the company's strategy. As you can see, if goal setting answers the question, for what the organization will strive if the action plan to achieve the goal answers the question What must be done to achieve the goal, then the strategy answers the question what from possible ways, How the organization will move towards achieving the goal. Choosing a strategy means choosing funds, with the help of which the organization will solve the problems facing it.
2.3.1. The essence of the organization's strategy
Two understandings of strategy
The choice of strategy and its implementation constitute the main content of strategic management.
There are two opposing views on understanding strategy. The first understanding of strategy is based on the following process. The final state is determined quite accurately, which must be achieved after a long period of time. Next, it is recorded what needs to be done in order to achieve this final state. After this, an action plan is drawn up, broken down by time intervals (five-year plans, years and quarters), the implementation of which should lead to the achievement of a final, clearly defined goal.
Basically, this understanding of strategy existed in systems with centrally planned economies. With this understanding, strategy is a specific long-term plan to achieve a specific long-term goal, and strategy development is finding a goal in drawing up a long-term plan.
This approach is undoubtedly based on the fact that all changes are predictable, that all processes occurring in the environment are deterministic and can be fully controlled and managed. However, this premise is not true even for a planned economy. Moreover, it is completely incorrect in a market economy. Moreover, the development of market economic systems in recent decades suggests that the speed of environmental change processes, as well as the magnitude additional features, which are contained in these changes, are constantly increasing. Therefore, the strategy of an organization’s behavior in a market economy should, first of all, contain the possibility of obtaining benefits from changes.
The second understanding of the strategy is as follows: strategy is a long-term, qualitatively defined direction of development of an organization, relating to the scope, means and form of its activities, the system of relationships within the organization, as well as the organization’s position in environment leading the organization to its goals.
This understanding of strategy excludes determinism in the behavior of the organization, since the strategy, determining the direction towards the final state, leaves freedom of choice taking into account the changing situation. In this case, the strategy general view can be characterized as the chosen direction, the path of further behavior in the environment, the functioning within which should lead the organization to achieve its goals.
An example of a strategy of the first type is a long-term plan for the production of certain products, which fixes how much and what to produce in each specific time period and how much and what will be produced in the final period.
Examples of strategies of the second type, i.e. those that strategic management deals with can serve as the following strategies:
Increase the share of sales volume in the market to a certain percentage, without lowering prices;
Start production of a certain product while reducing production of another product;
Penetrate distribution networks controlled by a competitor;
Make the transition to a group form of labor organization.
Along with strategies, a very important role is played in the strategic management of an organization. rules(policy), which, like strategies, determine the functioning of the organization, but unlike strategies, they do not explicitly have a target origin. They are predominantly restrictive or prescriptive in nature, creating the atmosphere in which activities are carried out. Some rules may have a very broad meaning, while others may have a rather narrow meaning, relating to a particular aspect of the life of an organization, or a separate function. What all rules have in common is that they set the boundaries of activity and behavior in an organization, thereby directing the functioning of the organization towards the implementation of its strategies. Many rules have a very long life. At the same time, there are rules that are introduced to implement a specific strategy or to help achieve a specific goal. The rules themselves can be the subject of strategic management if the strategic goal of the organization can be to change it inner life, organizational culture, etc.
2.3.2. Types of Business Development Strategies
The definition of strategy for a company fundamentally depends on the specific situation in which it finds itself. In particular, this concerns how the firm's management perceives market opportunities differently, what strengths of its potential the firm intends to use, what traditions in the field of strategic decisions exist in the firm, etc. In fact, we can say that as many firms exist, there are just as many specific strategies. However, this does not mean that it is impossible to carry out some typology of management strategies. An analysis of the practice of choosing strategies shows that there are common approaches to formulating strategy and a general framework into which strategies fit.
As mentioned earlier, in its most general form, strategy is the general direction of action of an organization, the adherence to which in the long term should lead it to its goal. This understanding of strategy is valid only when considering it at the top level of management of an organization. For a level lower in the organizational hierarchy, the upper-level strategy becomes a goal, although for a higher level it was a means. So, for example, market behavior strategies developed for the company as a whole act as targets for the marketing service of this company. To avoid ambiguity in the interpretation of strategies, later in this chapter only the strategies of the organization as a whole will be considered, and not of its individual units.
When determining a company's strategy, management is faced with three main issues related to the company's position in the market:
Which business to stop;
What business to continue;
Which business to go into?
At the same time, attention is focused on:
What the organization does and does not do;
What is more important and what is less important in the activities carried out by the organization.
2.3.3. Approaches to strategy development
According to one of the leading theorists and specialists in the field of strategic management, M. Porter, there are three main approaches to developing a strategy for a company’s behavior in the market.
The first approach is related to leadership in cost minimization. production. This type of strategy is associated with the fact that the company achieves the lowest costs of production and sales of its products. As a result, it can achieve a larger market share through lower prices for similar products. Firms implementing this type of strategy must have a good organization of production and supply, good technology and engineering design base, as well as good system product distribution. In order to achieve the lowest costs, everything that is related to the cost of production and its reduction must be carried out at a high level of execution. Marketing with this strategy does not necessarily have to be highly developed.
The second approach to strategy development is related to specialization in production. In this case, the company must carry out highly specialized production and high-quality marketing in order to become a leader in its field. This leads to the fact that buyers choose the products of this company, even if the price is quite high. Firms implementing this type of strategy must have a high R&D capacity, excellent designers, an excellent system for ensuring high quality products, and a developed marketing system.
The third approach refers to fixation of a certain market segment And concentration of efforts firms in the selected market segment. In this case, the company thoroughly determines the needs of a certain market segment for a certain type of product. In this case, the company may strive to reduce costs or pursue a policy of specialization in the production of the product. It is also possible to combine these two approaches. However, what is absolutely mandatory for carrying out a strategy of the third type is that the company must base its activities primarily on an analysis of the needs of customers in a certain market segment. That is, it should base its intentions not on the needs of the market in general, but on the needs of very specific or even specific clients.
Let's consider some of the most common business development strategies, verified by practice and widely covered in the literature (see, for example, Kotler, pp. 58-59). These strategies are usually called basic, or reference. They reflect four different approaches to the growth of a company and are associated with changes in the state of one or more elements: 1) product 2) market; 3) industry; 4) the position of the company within the industry; 5) technology. Each of these five elements can be in one of two states: an existing state or a new state. For example, for a product, this could be either a decision to produce the same product or to move to produce a new product.
2.3.4. Strategies concentrated growth
First group reference strategies constitute the so-called concentrated growth strategies. This includes those strategies that are associated with changes in the product and (or) market and do not affect the other three elements. When following these strategies, a firm tries to improve its product or start producing a new one without changing its industry. As for the market, the company is looking for opportunities to improve its position in the existing market or transition to new market.
The specific types of strategies of the first group are the following:
strategy for strengthening market position, with in which the company does everything to conquer with a given product in a given market best positions. This type of strategy requires a lot of marketing effort to implement. There may also be attempts to implement so-called horizontal integration, in which the company tries to establish control over its competitors;
market development strategy, which consists in searching for new markets for an already produced product;
product development strategy, involving solving the problem of growth through the production of a new product that will be sold on a market already developed by the company.
2.3.5. Integrated Growth Strategies
The second group of reference strategies includes those business strategies that are associated with the expansion of the company by adding new structures. These strategies are called integrated growth strategies. Typically, a firm can resort to such strategies if it is in a strong business, cannot pursue concentrated growth strategies, and at the same time, integrated growth does not conflict with its long-term goals. A firm can pursue integrated growth either by acquiring ownership or by expanding from within. In both cases, the position of the firm within the industry changes.
There are two main types of integrated growth strategies:
reverse vertical integration strategy aimed at growing the company through acquisition or strengthening control over suppliers. The company can either create subsidiaries that carry out supply, or acquire companies that already carry out supply. Implementing a reverse vertical integration strategy can give a company very favorable results due to the fact that its dependence on fluctuations in component prices and supplier demands will decrease. Moreover, supplies as a cost center for a company can turn into a revenue center in the case of reverse vertical integration;
strategy for forward vertical integration expressed in the growth of the company through the acquisition or strengthening of control over the structures located between the company and the end consumer, namely distribution and sales systems. This type of integration is very beneficial when intermediary services are expanding very much or when the company cannot find intermediaries with a high-quality level of work.
2.3.6. Diversified Growth Strategies
The third group of reference business development strategies are diversified growth strategies. These strategies are implemented in the case when the company cannot further develop in a given market with a given product within a given industry. The main factors determining the choice of a diversified growth strategy are formulated (Glueck, p. 211):
Markets for the business being carried out find themselves in a state of saturation or a reduction in demand for the product due to the fact that the product is at the dying stage;
The current business provides an influx of money that exceeds the needs, which can be profitably invested in other areas of the business;
New business may cause a synergistic effect, for example due to best use equipment, components, raw materials, etc.;
Antimonopoly regulation does not allow further expansion of business within this industry;
Tax losses can be reduced;
Access to global markets may be facilitated;
New qualified employees can be attracted or the potential of existing managers can be better used.
The main strategies for diversified growth are the following:
centered diversification strategy is based on the search and use of additional opportunities for the production of new products that are contained in the existing business. That is, existing production remains at the center of the business, and new production arises based on the opportunities contained in the developed market, the technology used, or other strengths functioning of the company. Such capabilities may, for example, be the capabilities of the specialized distribution system used;
strategy horizontal diversification involves seeking growth opportunities in an existing market through new products that require new technology different from the one currently in use. With this strategy, the company should focus on the production of technologically unrelated products that would use the company’s existing capabilities, for example, in the field of supply. Since the new product should be focused on the consumer of the main product, then in its quality it should be complementary to the product already being produced. An important condition for the implementation of this strategy is a preliminary assessment by the company of its own competence in the production of a new product;
conglomerate diversification strategy consists in the fact that the company expands through the production of new products that are technologically unrelated to those already produced, which are sold in new markets. This is one of the most difficult development strategies to implement, since its successful implementation depends on many factors, in particular on the competence of existing personnel and especially managers, seasonality in the life of the market, the availability of the necessary amounts of money, etc.
2.3.7. Reduction Strategies
The fourth type of reference business development strategies are reduction strategies. They are implemented when a company needs to regroup forces after a long period of growth or due to the need to improve efficiency, when there are recessions and dramatic changes in economics, such as, for example, structural adjustment, etc. In these cases, firms resort to targeted and planned production reduction strategies. The implementation of these strategies is often not painless for the company. However, it must be clearly understood that these are the same firm development strategies as the growth strategies discussed, and under certain circumstances they cannot be avoided. Moreover, sometimes these are the only possible strategies for business renewal, since in the vast majority of cases renewal and growth are mutually exclusive business development processes.
There are four types of targeted business reduction strategies:
elimination strategy represents an extreme case of a downsizing strategy and is carried out when the firm cannot conduct further business;
harvest strategy involves abandoning a long-term view of business in favor of maximizing income in the short term. This strategy is applied to a dead-end business that cannot be sold profitably, but may generate income at harvest time. This strategy involves reducing purchasing costs, labor costs, and maximizing income from the sale of existing product and production that continues to decline. The “harvesting” strategy is designed to ensure that by gradually reducing a given business to zero, achieving maximum total income during the period of reduction;
reduction strategy consists of a firm closing or selling one of its divisions or businesses to effect a long-term change in business boundaries. Often this strategy is implemented by diversified firms when one of the industries does not fit well with others. This strategy is also implemented when it is necessary to obtain funds for the development of more promising businesses or the start of new ones that are more consistent with the long-term goals of the company. There are other situations that require a reduction strategy;
cost cutting strategy is quite close to a reduction strategy, since its main idea is to search for opportunities to reduce costs and carry out appropriate measures to reduce costs. However, this strategy has certain distinctive features, which consist in the fact that it is more focused on eliminating fairly small sources of costs, and also that its implementation is in the nature of temporary or short-term measures. The implementation of this strategy is associated with a reduction production costs, increasing productivity, reducing hiring and even laying off staff, stopping the production of unprofitable goods and closing unprofitable facilities. It can be considered that the cost reduction strategy turns into a reduction strategy when divisions or fixed assets begin to be sold in a sufficiently large volume.
In real practice, a company can simultaneously implement several strategies. This is especially common among diversified companies. The company can also pursue a certain sequence in the implementation of strategies. Regarding the first and second cases, they say that the company carries out combined strategy.
2.3.8 Defining the firm's strategy
The strategy selection process includes the following main steps:
Understanding the current strategy;
Conducting business portfolio analysis;
Choosing a company's strategy and evaluating the chosen strategy.
1) Understanding the current strategy
Understanding current strategy is important because decisions about the future cannot be made without a clear understanding of where the organization is and what strategies it is pursuing. Various schemes for understanding the current strategy can be used. One possible approach is proposed by Thompson and Strickland. They believe that there are up to five external and internal factors that need to be assessed in order to understand the strategy being implemented.
The scope of the company’s activities and the degree of diversity of its products, the diversification of the company;
General character and the nature of the firm's recent acquisitions and sales of portions of its properties;
The structure and direction of the company’s activities over the last period;
Opportunities that the firm has been focused on recently;
Attitude to external threats. Internal factors:
Goals of the company;
Criteria for the distribution of resources and the current structure of capital investments for manufactured products;
Attitude to financial risk both on the part of management and in accordance with actual practice and implemented financial policies;
Level and degree of concentration of efforts in the field of R&D;
Individual strategies functional areas(marketing, production, human resources, finance, research and development).
2) Business (product) portfolio analysis
Business portfolio analysis is one of the most important strategic management tools. It provides a clear picture of how the individual parts of a business are highly interconnected and that the portfolio as a whole is significantly different from the sum of its parts and is much more important to the firm than the health of its individual parts. With the help of business portfolio analysis, such important business factors as risk, cash flow, renewal and attrition can be balanced.
It is safe to say that business portfolio analysis is the basis strategic planning. At the same time, it must be remembered that analysis of a business portfolio is only one of the tools of strategic management and it in no way replaces either strategic planning as a component of strategic management, or, of course, strategic management as a whole. This conclusion has important methodological significance, since quite often the role of the business portfolio analysis process is significantly exaggerated.
Here we will focus only on those issues of business portfolio analysis that must be taken into account when choosing a business strategy.
There are six steps in conducting a business portfolio analysis.
The first step is to select levels in the organization to conduct business portfolio analysis. A firm cannot perform analysis only at the firm micro level. It is necessary to define a hierarchy of levels of analysis of the business portfolio, which should begin at the level of an individual product and end at the top Level of the organization.
The second step is to capture units of analysis, called strategic business units (SBUs), in order to use them when positioning them on business portfolio analysis matrices. Very often, SBUs differ from production units. SUBs may cover a single product, they may cover several products that satisfy similar needs, and some firms may view SUBs as product-market segments.
The third step is to define the parameters of the business portfolio analysis matrices in order to have clarity regarding the collection of the necessary information, as well as to select the variables on which the portfolio analysis will be carried out. For example, when studying the attractiveness of an industry, such variables may include market size, degree of protection from inflation, profitability, market growth rate, and the degree of market penetration in the world.
Variables that can be used to measure business strength include market share, market share growth, relative market share relative to the leading brand, quality leadership, or other characteristics such as cost, profitability relative to the leading brand. When determining the size of matrices, a very important role is played by the choice of units of volume measurement, standards of reduction to a single base, time intervals, etc.
Careful consideration of all of the above factors in fixing the size of the matrices plays an extremely important role for a high-quality analysis of a business portfolio.
The fourth step - data collection and analysis is carried out in many areas, although four most important areas are highlighted:
The attractiveness of the industry from the point of view of the presence of positive and negative aspects of the industry, the nature and degree of risk, etc.;
The competitive position of the company in the industry, as well as the overall competitive position of the company, assessed on special scales for individual key characteristics of competitiveness;
Opportunities and threats to the firm, which are assessed in relation to the firm, and not to the industry, as is done in the case of assessing the attractiveness of the industry;
Resources and personnel qualifications, considered from the perspective of the company’s potential to compete in each specific industry.
The fifth step is the construction and analysis of business portfolio matrices, which should give an idea of current state portfolio, on the basis of which management will be able to predict the future state of the matrices and, accordingly, the expected portfolio of the company’s businesses. At the same time, management must develop four possible scenarios dynamics of matrix changes. The first scenario is based on extrapolation of existing trends, the second is based on the fact that the state of the environment will be favorable, the third scenario considers what will happen in the event of a disaster, and, finally, the fourth scenario reflects the most desirable development for the company.
The development of the dynamics of change in matrices is carried out in order to understand whether the transition of a business portfolio to a new state will lead to the company achieving its goals. To do this, management must evaluate general state predicted business portfolio. In particular, the following characteristics of the projected portfolio state should be clarified:
· – does the portfolio include a sufficient number of businesses in attractive industries;
· whether the portfolio raises too many questions and ambiguities;
· whether there is a sufficient number of stable profitable products in order to grow promising and finance new products;
· does the portfolio provide sufficient income of both profit and cash;
· Is the portfolio highly vulnerable in case of negative trends;
· Are there many businesses in the portfolio that are weak in terms of competition? Depending on the answer to these questions, management may come to the conclusion that it is necessary to form a new product portfolio.
The sixth step - determining the desired business portfolio is carried out in accordance with which of the options can best help the company achieve its goals. Speaking of this, it is important to emphasize that business portfolio analysis matrices in themselves are not a decision-making tool. They only show the state of the business portfolio, which must be taken into account by management when making decisions.
3) Choosing a company strategy
The choice of a company's strategy is carried out by management based on an analysis of key factors characterizing the state of the company, taking into account the results of an analysis of the business portfolio, as well as the nature and essence of the strategies being implemented.
Main key factors which should be primarily taken into account when choosing a strategy are the following.
State of the industry and the position of the company in the industry can often play decisive role when choosing a company's growth strategy. Leading, strong firms must strive to maximize the opportunities generated by their leadership position and to strengthen this position. Leading firms, depending on the state of the industry, must choose different growth strategies. So, for example, if an industry is declining, then one should rely on diversification strategies, but if the industry is rapidly developing, then the choice should fall on a concentrated growth strategy or an integrated growth strategy.
Weak firms must behave differently. They must choose those strategies that can lead to an increase in their strength. If there are no such strategies, then they should leave this industry. For example, if attempts to become stronger in a rapidly growing industry through concentrated growth strategies do not lead to the desired state, the firm must implement one of the downsizing strategies.
Thompson and Strickland proposed the following matrix for choosing a strategy depending on the dynamics of product market growth (equivalent to industry growth) and the competitive position of the company
Company goals give uniqueness and originality to the choice of strategy in relation to each specific company. The goals reflect what the company strives for. If, for example, the goals do not imply intensive growth of the company, then appropriate growth strategies cannot be chosen, even though there are all the prerequisites for this both in the market and in the industry, and in the company’s potential.
Top management interests and attitudes play a very large role in choosing a company's development strategy. For example, there are times when senior management is reluctant to reconsider decisions it has made previously, even if new prospects open up. Management may like to take risks, or, on the contrary, they may strive to avoid risk by any means. And this attitude can be decisive in choosing a development strategy, for example, in choosing a strategy for developing a new product or developing new markets. Personal likes or dislikes on the part of managers can also greatly influence the choice of strategy. For example, a course may be taken to diversify or take over another company, just to settle personal scores or prove something to certain individuals.
Financial resources of the company also have a significant impact on the choice of strategy. Any changes in a firm's behavior, such as entering new markets, developing a new product, or moving into a new industry, require large financial costs. Therefore, firms that have large financial resources or easy access to them are in a much better position when choosing a behavioral strategy and have much more to choose from. larger number strategy options than firms with severely limited financial capabilities.
Qualification of workers, as well as financial resources, is a strong limiting factor when choosing a development strategy. Deepening and expanding the qualification potential of workers is one of the most important conditions that ensure the possibility of transition to new production or to high-quality technological updating of existing production. Not having enough complete information about the qualification potential, management cannot make the right choice of company strategy.
Firm's obligations According to previous strategies, they create a certain inertia in development. It is not possible to completely abandon all previous commitments in connection with the transition to new strategies. Therefore, when choosing new strategies, it is necessary to take into account the fact that for some time the obligations of previous years will remain in force, which, accordingly, will restrain or adjust the possibilities for implementing new strategies. In this regard, to avoid strong negative influence old obligations, it is necessary to take them into account as fully as possible when choosing new strategies and to include their implementation in the process of implementing new strategies.
Degree of dependence on the external environment has a significant impact on the choice of firm strategy. There are situations when a company is so dependent on suppliers or buyers of its products that it is not free to make a choice of strategy based only on the possibilities of more fully using its potential. In some cases, external dependence can play a much larger role in the choice of a company's strategy than all other factors. Strong external dependence may be due to legal regulation of the company’s behavior, as well as social restrictions, conditions of interaction with the natural environment, etc.
Time factor must be taken into account in all cases of choosing a strategy. This is due to the fact that both opportunities and threats for the company, and planned changes always have certain time limits. At the same time, it is important to take into account both calendar time and the duration of the stages of implementation of specific actions to implement strategies. A company cannot implement a strategy at any time and not within any calendar period, but only at those moments and within the time frame in which the opportunity for this arises. Very often, success in implementing a strategy and, therefore, success in competition is achieved by the company that has better learned to take into account time and, accordingly, is better able to manage processes over time.
4) Evaluation of the chosen strategy
The assessment of the chosen strategy is mainly carried out in the form of an analysis of the correctness and sufficiency of taking into account the main factors that determine the possibility of implementing the strategy when choosing a strategy. The procedure for evaluating the chosen strategy is ultimately subject to one thing: whether the chosen strategy will lead the company to achieve its goals. And this is the main criterion for evaluating the chosen strategy. If the strategy meets the company’s goals, then its further assessment is carried out in the following areas.
Compliance of the chosen strategy with the state and requirements of the environment . It checks to what extent the strategy is linked to the requirements of the main environmental actors, to what extent factors of market dynamics and development dynamics are taken into account life cycle product, whether the implementation of the strategy will lead to the emergence of new competitive advantages, etc. Compliance of the chosen strategy with the potential and capabilities of the company . In this case, it is assessed how well the chosen strategy is linked to other strategies, whether the strategy corresponds to the capabilities of the personnel, whether the existing structure allows for the successful implementation of the strategy, whether the program for implementing the strategy is time-tested, etc.
Acceptability of risk embedded in the strategy. The justification of the risk is assessed in three areas:
Are the assumptions underlying the choice of strategy realistic?
What negative consequences can a failure of strategy have for the company?
Does the possible positive result justify the risk of losses from failure to implement the strategy.
The interests of the founders of the company, the real owners of the company, managers at various levels, employees of the company, consumers of the company’s products, competitors of the company and other economic entities as the basis for their interaction within the company and influence on the formation of the company’s target settings. Recognizing, guessing and anticipating the company's mission in the process of intra-company goal setting. Certainty and uncertainty in goal setting. Analysis and intuition. Factors predicting the mission of a company: the history of the company, the nature of the activities of economic entities involved in the company, the economic environment of the company, the resources available to the company, the qualitative differences of the company. Hierarchy of goals, company priorities. The company's strategy as a unity of the objective (the company's mission) and the subjective (the hierarchy of the company's goals).
The main advantage of this approach is that it allows one to avoid the influence of psychological factors, for example, reluctance to give up one’s publicly presented point of view, personal antipathy or sympathy, and exposure to pressure from authorities. In the process of applying the method, a scenario is drawn up that describes the general opinion of experts about the current state of the problem and forecasts for the future. The scenario serves as the basis for the second stage - drawing up the so-called goal tree. A goal tree is an ordered hierarchy of goals, expressing their internal relationships and subordination.
In any large organization that has several different structural divisions and several levels of management, a hierarchy of goals develops, which is a decomposition of higher-level goals into lower-level goals. The peculiarity of the hierarchical construction of goals in an organization is that, firstly, goals of a higher level are always broader in nature and have a longer time interval for achievement. Secondly, lower-level goals act as a kind of means for achieving higher-level goals. The hierarchy of goals in an organization plays a very important role, since it establishes the structure of the organization and ensures that the activities of all divisions of the organization are oriented toward achieving top-level goals. If the hierarchy of goals is constructed correctly, then each unit, achieving its goals, makes the necessary contribution to the organization’s activities in achieving the goals of the organization as a whole.
Third phase. Establishing a hierarchy of goals involves defining such goals for all levels of the organization, the achievement of which by individual units will lead to the achievement of overall organizational goals. At the same time, the hierarchy should be built according to both long-term and short-term goals.
This form of management is focused on a system of goals, in which a hierarchy of goals is built. This hierarchy is based both on general goals affecting the state of the corporation as a whole, and private (current) ones belonging to the activities of subsidiaries. They usually refer each time to a precisely defined period of time. The goal system is a dynamic management system due to constant monitoring and revision of set goals using analysis of performance results and taking into account proposals for their improvement. This management principle is characteristic of American corporations.
All goals established at the enterprise are fulfilled in a certain hierarchical sequence. This means that the goals of one management level (ultimate for it) are a means of achieving the goals of a higher level. The hierarchy of goals is illustrated in Fig. 32.7.
The hierarchy of goals shows that they are transformed into lower-order tasks for functional services or departments within the organization. There must be an internal relationship between corporate and operational goals.
Targeted approach. It is based on the assertion that all organizational performance criteria are directly or indirectly related to goals. However, conflicting, diverse, vague and vague goals characteristic of NPOs make it difficult to build a hierarchy of goals and identify the main, defining one. For a commercial organization, the main goals are related to production and efficiency is defined as the ratio of costs to profits or profitability ratios. The target approach, which is the main one for commercial organizations, can only perform auxiliary functions for identifying the effectiveness of non-profit organizations.
First of all, this is the original organization of society, built on the postulates of the religion of money. Inequality and hierarchy are embedded in the consciousness of society. The goal of life and the criterion of success is considered to be maximum wealth.
An ordered hierarchy of goals is described by a goal tree. To do this, a sequential decomposition of the main strategic goal (mission) into subgoals is carried out according to the following rules
Hierarchy of goals Subgoals, indicators
A properly organized process of developing goals involves going through four phases: identifying and analyzing trends that are observed in the environment; setting goals for the organization as a whole; building a hierarchy of goals; establishing individual goals.
Fourth phase. In order for the hierarchy of goals within the organization to acquire its logical completeness and become a truly effective tool for achieving the goals of the organization, it must be communicated to each individual employee. In this case, one of the most important conditions for the successful operation of the organization is realized; each employee, through his personal goals, is included in the process of jointly achieving the ultimate goals of the organization. Employees of the organization in such a situation get an idea not only of what they have to achieve, but also of how the results of their work will affect the final results of the organization’s functioning, how and to what extent their work will contribute to achieving the organization’s goals.
The development of an organizational management structure begins with the formulation of a hierarchy of goals within the organization, in accordance with which a balanced management structure is built. With this formulation of the problem, the stage of formulating goals becomes extremely important, since incorrect formulations significantly distort the organizational structure of the enterprise.
There is a certain hierarchy of goals of foreign operations, and, as can be seen from the data in Fig. 6.1, there are four groups of branches according to their purposes. Branches oriented towards the domestic market produce products that replace imports into the host country. According to the MVTP review, 78% of branches of the manufacturing industry pursue this goal (analysis of 3,200 branches of 1,250 parent companies)3, focused on improving efficiency
The work of A. P. Dobnov, A. A. Kna and B. P. Orlov sets out the main starting positions of the project of scientific substantiation of the planned formation of a regional economy, developed and organized industrial production by the Siberian Branch of the Academy of Sciences of the USSR. The most important principle of the methodology of system analysis is the consideration of each complex management object through the prism of a hierarchy of goals, which provides for the subordination of the particular tasks of the object's elements to a single final goal of its development.In accordance with this, the functions of each management link are determined, which serve as a means of achieving the general goal.
Hierarchy of goals. In accordance with their interests, persons who have one or another relationship with the enterprise form their goals. These goals are multidimensional, multi-level, subordinate and can be duplicated in the sense that the same goal can meet the interests of different categories of persons. These goals include increasing personal well-being, reliability
