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Key corporate objectives represent a precise statement of an organisation's goals and are formulated by senior management. They are often, though not always, expressed in financial terms, such as profit levels, sales target figures or share values, i.e. they tend to be

quantified. They are an expression of how the organisation proposes to meet its stakeholders' expectations.

Objectives can be of two types:

 Closed objectives, which are capable of being achieved at some time in the future: for

example, "we aim to supply a million telecommunications services to customers by the end of 2010".

 Open objectives, which can never be finally achieved, since they will always persist:

for example, "to build a strong future out of our opportunities".

Johnson and Scholes argue that, contrary to some other opinions, both closed and open objectives can be useful. Closed objectives have a particular part to play in some scenarios, such as when a business hits a crisis. If a turnaround situation develops, where the choice is between the business either going under or surviving, then specific objectives are essential. Closed objectives are also helpful for planning purposes, since the objective in this case becomes a target to be achieved. For example, financial objectives such as profitability are useful for judging the success, or otherwise, of a new SBU.

Profit versus Other Objectives

All organisations should have clearly stated objectives which are specific, measurable, achievable, realistic, and timed. In many organisations the most important overriding objectives are in some way concerned with profit, expressed as a range of financial targets for the company.

Most economists have long stressed the view that businesses should "maximise" their profits. In practice few firms actually set their objectives in terms of economists' notion of maximised profits; but many companies' objectives are expressed in terms of some measure of profit. This may be, say, a specified rate of return on capital employed, or a required profit figure for the next accounting period.

So what explains this overriding importance of profit objectives in so many companies, and what other performance objectives might the strategic plan include?

Why Profit is the Dominant Objective

 A major reason for organisations using profits as the overriding objective is the belief that this gives rise to the most effective overall use of scarce resources. If companies always attempt to maximise profits, it is argued, then factors of production will be used to their best effect. This philosophical legacy of economists, regarding the role and purpose of profits in an economy, still pervades and affects our thinking with regard to the primary role and purpose of organisations

 A second reason is that quite simply a company that consistently fails to make profits will eventually cease to exist (unless of course it receives funds from some other source such as a government subsidy).

 A third reason is that most companies need to produce enough profit to satisfy the providers of capital whether these are private owners, shareholders, banks or other sources. If profits are not sufficient these providers are likely to withdraw their capital.  A fourth reason for stressing the primacy of profits is that, unless a company makes

adequate profits, then in addition to not satisfying investors and shareholders the company itself may be unable to invest itself in new machinery, new products, and so on. Much investment comes from retained profits.

Objectives Other Than Profit

Profits are not the only objective that should be included in strategic plans, which should have regard to other key areas of corporate performance. These might legitimately include objectives relating to one or more of the five areas of performance discussed below.

(a) Company Growth

Very often companies set objectives in terms of required rates of company growth. This, of course, may include objectives for growth in profits, but often is couched in terms of say growth in sales/turnover, or even some other measure of company size such as number of employees.

Often company success is judged on the basis of growth rates. Companies who have been very successful in terms of growth include Amazon and Google

(b) Market Share

Gaining a particular market share is often a key objective.. This is because market share is one of the best measures of marketing and competitive success. Clearly there is a danger that market share objectives and targets can conflict with profitability

objectives.

In the airline market the low-cost operators such as Ryanair and Easyjet have been very successful in increasing their shares.

(c) Corporate Stability or Survival

Particularly when economic conditions are difficult a company may focus as much on surviving as on growing and/or increasing its profits. Clearly too much emphasis on simply surviving can lead to a lack of innovation and entrepreneurship, but sometimes an organisation may have no option but to retrench.

The music industry's sales have been severely affected by the growth in downloading from the internet, and so record companies have turned from looking for growth to establishing objectives and strategies to survive.

(d) Corporate Image

Many companies have objectives relating to how they wish to be perceived in the market (and often in the wider society). For example, some companies wish to enhance their image as "green" organisations, or as "caring for the community". Examples of companies who consider performance in this area important include the retailer Body Shop and the oil company BP

(e) Technological/Innovation Leadership

Some companies set themselves the objective of being the technological/innovation leader in a market, though it has to be said that this is very often a subsidiary objective to the profit objective itself, i.e. the idea is that by being technological/innovation leader, higher long-term profits will be achieved.