CHAPTER 3

ORGANIZATIONAL GOALS
SIZE ,GROWTH AND LIFE CYCLES

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 What Is Goal?

• A goal is an objective or target • A goal is an idea of the future

that someone is trying to reach
or achieve.
• A goal is an aim or objective that
• A goal is roughly similar to a
you work toward with effort and
determination.
• Real-life examples: People have
many different kinds of goals.
These include career goals,
relationship goals, life goals, and
educational goals.
or desired result that a
person or a group of people
plan and commit to achieve.
purpose or aim, the anticipated
result which guides reaction, or
an end, which is an object,
either a physical object or an
abstract object, that has
intrinsic value.

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 The purpose of goals
• Goals are central to organizational effectiveness.
• Organizational effectiveness is a good indicator of the extent to
which an organization endeavors to meet its goals.
• Organizational goals serve four major purposes:
1. Goals provide guidance and a unified direction for people in the
organization – people get to understand where the organization is
going and why or how important the terminal is.
2. Goal setting practices strongly affect other aspects of planning –
effective goal setting promotes good planning and good planning
facilitates future goal setting.
3. Goals can serve as a source of motivation for employees in the
organization – goals that are specific and moderately difficult can
motivate people to work harder, especially if attaining the goal is
likely to result in rewards.
4. Goals provide an effective mechanism for evaluation and control –
performance can be assessed in future in terms of how successfully
today’s goals are accomplished
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 Kinds of goals

•Organizations establish many kinds of goals which vary by

level,
area and
time frame (Hodge et al., 2003). This is further explained.
1. Goals by level
oGoals are set for and by different levels within the organization. The
four basic levels of goals are the mission, strategic, tactical, and
operational goals.
oMission
•An organization’s mission is a statement of the fundamental unique
purpose that sets it apart from other firms of the same type and
identifies the scope of the business operations in product and market
terms.
•In brief, it is, the organization’s fundamental purpose for being.

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 Kinds of goals

•Organizations establish many kinds of goals which vary by

level,
area and
time frame (Hodge et al., 2003). This is further explained.
1. Goals by level
oGoals are set for and by different levels within the organization. The
four basic levels of goals are the mission, strategic, tactical, and
operational goals.
oMission
•An organization’s mission is a statement of the fundamental unique
purpose that sets it apart from other firms of the same type and
identifies the scope of the business operations in product and market
terms.
•In brief, it is, the organization’s fundamental purpose for being.

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 Strategic goals
These are goals set by and for top managers of the organization. They
focus on broad general issues.
For example, doubling sales revenue.
Tactical goals
These are set by middle managers. Their focus is on how to
operationalize actions necessary to achieve the strategic goals.
For example, which products to launch.
Operational goals
This are set by and for all low-level managers. Their concern is with
shorter term issues associated with the tactical goals.

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 2. Goals set by area
Organizations also set goals for different areas or function.
For example, finance, production, etc.
3. Goals set according to time frame
Organizations set goals according to different time frames as follows:
• Long term goals-This have explicit time frames. At strategic level,
long term often means 10 years or more
• Intermediate term-They have open ended time horizon.
At strategic level, this is around, 5 years.
• Short term-at strategic level this is about 1 year

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 Responsibilities for setting goals

 All managers must be involved in setting goals each should

however have a responsibility for setting goals that
correspond to his or her level in the organization (Hodge et
al., 2003).
 The mission and strategic goals are generally determined by
the board of directors and top managers.
 Top and middle managers then work together to establish
tactical goals. Finally, middle and lower level managers are
jointly responsible for setting operational goals.
 Many managers also set individual goals for themselves this
goal may involve, career paths, informal work-related goals
outside the normal array of official goals, or just about
anything of interest or concern to the manager.
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 9
• Managing multiple goals
• This helps to avoid conflicts or contradictions among goals.
• It is achieved through optimizing/improving. This involves
balancing and reconciling possible conflicts among goals.
• The manager therefore must look for inconsistencies, and
decide whether to pursue one goal to the exclusion of another
or to find a midrange target between the extremes (Hodge et
al., 2003).
Goals and effectiveness
• To judge effectiveness from the degree to which an organization
achieves its goals may itself not be sufficient. Hence the need to
look for other aspects that determine effectiveness such as:
• Resources and effectiveness
• Performance and stake holders (Hodge et al., 2003).
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 Organizational size

• There are diverse ways of defining organizational size depending on

the special interest or importance attached to it (Hodge et al., 2003).
For example, the organization’s role in the industry or economy-the
focus may be on finance and market measures like, asset value (asset
worth), revenues or market share.
• We may also want to know the relative size of the firm compared with
others in the industry and therefore focus on market share, and
concentration ratios as indicators of size.
Concentration ratios indicate the degree to which an industry is
concentrated in the hands of a few giants or dispersed among many
smaller firms.
• Another measure that may be considered to be useful in determining
organization size is the number of employees engaged by the firm.
• The larger the number, the bigger the size of the firm.

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 Stages in organization growth and size effects
• In the same way, people change as they grow and mature,
organizations experience different passages of stages as they
move through periods of growth (Hodge et al., 2003).
• Organizations emerge, prosper, grow, stagnate, decline and
sometimes die.
• However, organizations differ in their stages of development.
• Organizations can also backtrack in their growth path.
• Organizations become more complex and formalized as their size
increases and they mature.
• We can identify four different stages that organizations go
through as they grow:
• birth/entrepreneurial stage
• emergent structure
• formal organization
• dinosaurs and turn a round - giant organizations (Hodge et al.,
2003).
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 Major advantages and disadvantages of Small Sized Organizations

• The following are the major advantages and disadvantages of

small sized organizations:
• Advantages
• They are efficiently managed
• Decision making process is faster
• They have simple structures
• Disadvantages
• They suffer from inadequate funding
• They may find it hard to adopt costly yet more efficient
technologies
• They largely depend on one or two individuals to lead them
to success- this may imply lack of diversified thinking and
effective decision-making.
• They may not compete favorably in highly competitive
markets because they lack the benefits of economies of scale.
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 End of chapter 3

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