Drucker Chapter 7
Drucker: Chapter 7 – The Objectives of a Business
The emphasis on profit can misdirect a manager and endanger business survival by:
Undermining the future
Push the easily sold line to the detriment of others
Short-change research, promotion and other postponable investments
Delay capital spend as it could effect the bottom line leading to obsolescence of equipment
Management is the balance of a number of business needs and goals this requires judgement. Objectives are needed in every area where performance and results directly and vitally affect the survival and prosperity of the business. These are areas which are affected by every management decision and have to be considered in every management decision.
Objectives enable the manager to:
Organise and explain the whole range of business activity in a small number of general statements
Test the statements in actual experience
Predict behaviour
Appraise the soundness of decisions when they are made
Enable managers to analyse their experience and improve future performance
8 areas in which objectives of performance and results have to be set:
Market standing
Innovation
Productivity
Physical & financial resources
Profitability
Manager performance & development
Worker performance & attitude
Public responsibility
If objectives are intangible, eg public responsibility, it is managements job to make them tangible by deeds
How to Set Objectives
Objectives should be set by determining what shall be measured in each area and the yardstick for measurement – make things visible and tangible.
Some objectives are easily measured, such as profit. For objectives that are not easily measured, eg productivity, innovation and resources, statements of intentions are outlined.
Market Standing
Market standing has to be measured against the market potential and against the performance of suppliers of competing products or services – a company should understand their market share in order to compete. A business that
The emphasis on profit can misdirect a manager and endanger business survival by:
Undermining the future
Push the easily sold line to the detriment of others
Short-change research, promotion and other postponable investments
Delay capital spend as it could effect the bottom line leading to obsolescence of equipment
Management is the balance of a number of business needs and goals this requires judgement. Objectives are needed in every area where performance and results directly and vitally affect the survival and prosperity of the business. These are areas which are affected by every management decision and have to be considered in every management decision.
Objectives enable the manager to:
Organise and explain the whole range of business activity in a small number of general statements
Test the statements in actual experience
Predict behaviour
Appraise the soundness of decisions when they are made
Enable managers to analyse their experience and improve future performance
8 areas in which objectives of performance and results have to be set:
Market standing
Innovation
Productivity
Physical & financial resources
Profitability
Manager performance & development
Worker performance & attitude
Public responsibility
If objectives are intangible, eg public responsibility, it is managements job to make them tangible by deeds
How to Set Objectives
Objectives should be set by determining what shall be measured in each area and the yardstick for measurement – make things visible and tangible.
Some objectives are easily measured, such as profit. For objectives that are not easily measured, eg productivity, innovation and resources, statements of intentions are outlined.
Market Standing
Market standing has to be measured against the market potential and against the performance of suppliers of competing products or services – a company should understand their market share in order to compete. A business that