Factors Influencing the Choice of Objectives

These factors are as follows:

• Forces in the Environment: Different stakeholders want to further their own interests. Each stakeholder group expects that its interests and claims will be considered in setting objectives. Customers, employees, investors, Government and community are the major stakeholders. Any factor relating to them may influence the objectives. For example, the objectives of an enterprise may be influenced by Government policy. The interests of various stakeholders may change from time to time thereby, causing a shift in the importance attached to different objectives.

• Resources and Capabilities of the Organisation: The strengths and weaknesses of a company influence the choice of objectives. Resources – both material and human-place restrictions on objective setting. For example, a company facing resource crunch cannot think of diversification and rapid growth.

• Internal Power Relationships: The relative decisional power which different decision-makers wield with respect to each in sharing the organisation’s resources is an important determinant of objectives. A dominant group such as the Board of Directors or Chief Executive may dominate objective setting.

• The values System of the Top Executives: A company’s focus on profits. Social responsibility and other objectives depend on the beliefs and attitudes of the top management. For example, if the top executives have philanthropic attitudes, the organization is likely to set socially oriented objectives.

• Awareness of Management: Organisations do not deviate radically from the paths that they have been following in the recent past; Changes in the choice of objectives take place in an incremental manner. Therefore, awareness of past objectives and evolution of the enterprises leads to a choice of objectives that have been emphasised in the past.