Change in aspiration level of top management and other key strategists of the organisation require a change in organizational objectives. In one way, the organization becomes a means for satisfying personal needs and ambitions of promoters and or top-level managers who perform the role of key decision makers. These personal needs and ambitions are reflected in organizational objectives. Whenever there is any change in aspiration level, it affects the organizational objectives; there will be a change in the objectives or a change in priority ordering of objectives. For example, Dhirubhai Ambani, the chairman of Reliance Industries Limited, once commented that he had the ambition of being number one industrialist of the country. The result is: he set highly ambitious objectives for Reliance and it grew at very fast rate. Change in organizational objectives caused by a change in aspiration level of management is more often found when a new team of executives or new chief executive from outside the organization having no commitment to the past strategies and objectives takes over the reins of management.
Demand for Change by Coalition Groups: Coalition refers to combination of two or more individuals, groups, or organizations for common objectives. Thus, coalition is goal-oriented alliance among individuals, groups, or organizations with different interests and is formed to mobilize joint efforts. Coalition concept is very common in political parties where two or more political parties combine themselves to fight against the third. Business or-generations have similar coalition. A business organization is viewed as consisting of a number of groups such as owners, managers, suppliers, employees, government agencies, etc. In this coalition, each group has a bargaining power and the result of complex bargaining process determines, to a great extent, the objectives of the organization. Emergence of a certain interest group as more dominant and powerful necessitates modification of organizational objectives. For example, change in owner-ship of a company, owner being a dominant group in the coalition, may necessitate change in the company’s objectives.
Change in Environment: An organization, being a subsystem of the broader societal system, has to work within the framework provided by the society and its various constituents, ‘commonly referred to as external environment or just environment of the organization. The organization sets its objectives and strategies taking environmental variables into account. The environment is dynamic and changes over time. Any change in the environment may disturb the present working of the organization, necessitating change in the organization’s operations including change in objectives. For example, after the liberalization of Indian economy in 1990s, many foreign companies entered in India making the business environment quite competitive. In such a situation, existing Indian organizations had to change their strategies and objectives. For example, in pre-liberalization era, automobile companies, particularly in two-wheeler and car segment, did not emphasize on product innovation because they were operating in sellers’ market. In the post liberalized era, product innovation became one of their objectives to face competition effectively. Similar phenomenon has happened in other segments too.
Change in Life – Cycle of Organization: Organizations have life cycles similar to human beings and pass generally through different stages in their life cycle from infancy to adulthood, maturity and then possibly decay as in old age. At each stage of life cycle, there may be specific thrust on an objective or set of objectives. Presents relationship between life cycle, organizational objectives and strategic focus of the organization
Organizationally Cycle, Objectives and Strategic Focus
| Life – cycle stage | Organizational Objectives | Strategic focus |
| Birth | Survival – create new entity | Identify an entrepreneurial idea and find resources |
| Infancy | Define mission and search environment | Define products, markets and functions to offer |
| Youth | Quantitative growth | Increase market share, claim more territory |
| Youth adult | Achieve uniqueness and establish niche | Redefine products, markets and functions |
| Adult | Qualitative growth, gain reputation | Reap rewards, mine markets for benefit |
| Maturity | Stabilize and contribute to Society | Maintain position with stability. |
| Old age | Survival | Procreate and retrench parts that are no longer healthy |
How much time will be taken by an organization to reach to a particular stage of its life cycle from its previous stage cannot be determined. Some-organizations complete the life cycle quickly while others take lot of time. For example, Toes, established in 1907, is still going great and its hunger for expansion is yet to be satiated. As against this, many leasing and hire-purchase companies establish in 1980s have completed their lifecycle and have exited. Similar was the case with Soya extraction companies. The major determinants of life cycle are quality of promoters, their management philosophy, and nature of industry.
Examples of Good Objective Setting: Given below are certain examples as to how the organizations should define their objectives so as to provide direction for their course of action.
- “We want to make our product the number one selling brand in its field in terms of units sold.” This leaves little doubt about the intended sales objectives and market standing.
- “We seek to produce the most durable, maintenance-free product that money can buy.” This obviously focuses on the organization striving to become leader in respect to high quality product.
- “Our profit objective is to increase the earning so that we earn 12 per cent post-tax return on the net worth of the company’s This is a very clear objective, easily measurable and providing direction about the quantum of profit for the organization.
Examples of Poor Objective Setting: Some organizations do not define their objectives as sharply as above statements suggest. Their objective setting is quite poor and may not provide clear direction. Following are some examples of such objective setting:
- Our objective is to maximize our profit.” This statement of objective is not subject to measurement because it does not provide any yardstick for that. Therefore, the organization cannot know whether it is -achieving its objective or not. Further it does not spell out the way in which the objective can be achieved. Therefore, it does not spell out commitment on the part of the management.
- Our objective is to offer best and cheapest product.” This statement does not provide yardstick for measuring cheapest and best product, hence fails to pro-vide direction.
