Research Topics: Goal Setting Examples

Alternative Goals of a Firm

Alternative Goals of a Firm It is agued that even though entrepreneurs are directed with certain goals and have superior ideas in some areas of the value chain, their yield is bounded by available cash ( 2005).  A shoe factory owner may aim to obtain maximum profit based on the industry leader but expanding firm size requires capital.  In the same manner, a fish vendor may aim to sell in other populated areas to prevent the merchandise from perishing but transportation costs may as well equivalent to the costs of unsold fish.  A significant point is that they have specific goals and strategic and entrepreneurial plans but are limited by absolute costs (of expansion) and transaction costs (of transportation).               In this respect, it becomes important to managers and entrepreneurs to rationalize their goals for their respective firms against their financial structure.  Being conservative decision-makers will lead them to prioritize the latter to determine the former while being daring will result to a reversed approached.  For the purpose of this discussion, they are initially daring but retain prudence to monitor performance and act when necessary.  Given this, we will explain alternative goals of a firm, how can they be measured and the role of financial managers to aid decision-makers towards these goals.   Perhaps the most famous goal of a firm, profit maximization is a core concern of economic theory (2001).  However easy and lucrative as it may sound, arriving at numerical benchmark alone requires the following methods.  For example, a firm can calculate its marginal revenues and marginal costs curves, in which case, MR=MC is the maximum profit benchmark.  Other alternatives are to graph total revenue and total cost curves and identify the farthest point between them or trial and error in price adjustments.  These methods, in the contrary, are tarnished by lack of information and the use of very short-run demand curves on top of costs and time spent of firm audit and market research.  Applied by counter economic theories of opportunity and transaction costs, profit maximization may not only be suited to be called “unrealistic” ( 2001) but also impractical.  Due to this, financial managers have disregarded this theory since its objective is limited, if not, unbounded.   An alternative goal that directly resolves the deficiencies of profit maximization is when a firm exemplifies profit satisfying behavior.  By using this, it places boundaries around the goal by making its own benchmark or target level of profit depending on preferred time frame and stake holder’s priority.  For US corporations, the most important stakeholders are shareholders (  2003 ).  As a result, goals are framed to maximize shareholder’s value.  The challenge for the firm is how to provide both short- and long-term values for shareholder’s investment.  This involves crucial decisions such as the level of diversification of firm’s products or markets, R&D plans, dividend issuance and the level of retained earnings.  Of course, this shareholder’s goal also determines the span and quality of operations of the firm particularly for publicly listed ones.   A goal of a firm, particularly a publicly traded one, is to maximize shareholders wealth (2006).  As debt financing is a risky alternative for a firm since it has to pay its obligation even though operational performance is bad ( 1999), the funding through equity is crucial to a firm’s future prospects, if not, existence.  As a result, managers are bound to satisfy their owners.  The difficulty in accomplishing the task is that there are trade-offs between short- and long-term decisions, that even if managers are acting in good faith, their shares remain unattractive for investors.               To be able to cope with shareholder’s demand on value, earnings per share (EPS) can serve as barometer ( 1999).  In simple terms, this is the profit of one unit of ordinary share of a certain business period.  Another is computing for the return on investment (ROI).  This shows the returns as percentage of investment being employed.  EPS and ROI are both profitability measures that shareholders will base their future investment decisions.  The higher the cash amount of EPS or percentage of ROI, it is most likely that shareholders will retain their investments and support the future strategies of managers.  In the contrary, a low EPS or ROI will result to shareholder selling their shares.                The same concept is true for the return on equity (ROE).  This is net income as percentage of equity capital.  This excludes other financing, like debt or non-equity, other than issuance of shares.  In formula, this can be illustrated as: Shareholder Value = Corporate Value – Debt (1999).  The problem of these measurement models is that opportunity costs of shareholders from investing to other firms are not taken into consideration.  As a result, the value becomes relative rather absolute and managers should use alternative measurements such as economic value added (EVA).               Like EPS, EVA is computed in dollar terms (1999).  The opportunity costs are taken into account since the percentage of weighted average cost of capital is multiplied to the cost of invested assets before getting the difference with respect to profit.  The higher the opportunity cost being forgone from a shareholder, the firm is ought to compensate for this with higher profits.  Otherwise, EVA will be negative and will mean that the firm is not maximizing the value of shareholders in terms of the value of money being forgone due to exclusive investment to the firm.  To maximize shareholder’s value, EVA should not only be positive but also increasing over a period of time.                   The Role of Financial Managers             Financial managers can aid a firm in achieving shareholder’s value through funds management.  The function involves three key activities: acquisition, allocation and utilization of investment (1999).  The first involves the determination of acquiring investments from the right source.  In effect, the firm does not only have to rely on shareholders but also through banks and other creditors to raise capital.  In effect, the problem of satisfying them is eased in favor of spreading the risk of the firm particularly the risk of too much equity.  This can become a problem when a firm undermines its positive credit rating or increasing the risk of hostile takeover.  At this point, the firm is not just automatically shouldering the responsibility of maximizing shareholder’s value rather being selective to prevent post-investment disappointment from them which can be otherwise resolved through other forms of financing.                 Second, allocation involves putting the investments in which a determined level of profit can be achieved.  This task necessitates scrutiny and benefit-cost analysis of a given list investment opportunities which can be shown numerically by financial managers.  They can suggest comparison to past performance, industry competitors and other benchmarks.  The plan will determine the outcome unless the management has enough flexibility in its operations to change investment allocations without affecting the pre-computed gains from them.  In most cases, however, financial flexibility is very difficult to obtain without enough liquidity or solvency.  In addition, business units who have already receive their budget may lead to under performance due to budget cut or lesser motivation feeling that the firm has so much room for loss due to budget raise.          Upon implementation, financial managers can also give operational and tactical advice to the management when currency exchange fluctuations or interest rates affected their pre-implementation strategies.  This is part of its utilization activities.  They can always rely on his computations to shield the firm in untoward changes in its earlier allocation.              Credit:ivythesis.typepad.com

Alternative Goals of a Firm

Alternative Goals of a Firm It is agued that even though entrepreneurs are directed with certain goals and have superior ideas in some ar...

Organizational Behaviour

<li class="MsoNormal" style="text-align: justify; line-height: 200%"> Comment on Betty’s Approach using the SMART goal setting as criteria</li> Prior to the comment on the approach of Betty Liu in the management of Best Food Forward, the SMART goal setting must be first defined. According to (2006) SMART stands for Specific, Measurable, Attainable, Realistic and Tangible. Moreover, according to  (2006) it is an instrument that is applied in establishing the goals and objectives of an individual or an organization.             In the case of Betty Liu her approach in management will not pass using the SMART goal setting as criteria. First Betty is working in an organization in which goals must be achieved not only by the supervisor but the staff or the subordinates, as well, and in this case the employees under the supervision of Betty Liu. The performance of every subordinate of Betty has an impact in the overall performance of her team. In any team or organisation, it must have an establish goal, according to  (1990) goals increase the performance levels of an individual and the group. Moreover, (1990) stated that performance goals are the regulators and the causes of the performance of employees in the workplace.             According to  (1999) being specific- the goals and the methods of attaining those goals must be clearly defined and determine. In this case alone, Betty will not be able to pass with her style in management because she does not have a specific goal for the whole organisation. She was also not clear on her aims and objectives, her objectives are too broad which is to increase the performance of the sales of each employee. She did not specifically state what products must have an increase in sales. Aside from that Betty did not ask her subordinates about the goals they want to reach as an organisation. Participation of employees was not employed under her management. Definitely in this aspect Betty did not pass according to the SMART goal setting criteria.             In the second aspect, Schwalbe discusses that the goals must be measured quantitatively or numerically. In this criterion, Betty also failed because she only stated an objective and that objective was not backed-up by numbers. The goal of the company is too broad and cannot be measured numerically because it does not state a specific area in which it needs an increase and up to how many percentages the organization wanted to reach. Another is that Betty does not have a particular timeframe in which she wanted to attain the goals. It is an essential part of an objective to have numbers in which the company wants to achieve and the time in which it must be done.             In the third aspect is the goals must be attainable, the A in SMART criteria can also stand for agreed and appropriate. Attainable goals must be possible. Achieving goals are usually a stretch especially if the goal is quite ambitious; those goals are just fine because it makes an organization want to reach the desired goal. According to Lorenzo (2006) “when you set goals that channels your passion, your brain works and determine ways to make it happen.” Betty provided a goal that is somewhat attainable because her only goals is to increase the sales performance, however she missed the point that goals that are set must develop skills an knowledge of her, as well as, the employees. Her goal does not convey any passion; employees will just listen to her but they will not exert an extra amount of effort in order to surpass the goal. The objective set by Betty is not powerful enough to arouse strong interest among the employees, added the fact that they were not able to participate in the goal-making process which makes Betty’s goal more unenthusiastic to attain. Apart from those, her goal is not specific and not measurable which makes it more difficult to attain.             The fourth aspect is realistic; a realistic goal is when the supervisor and employees are both willing to spend time and effort in order to attain and achieve the desired outcomes. Betty’s goal is realistic in a sense because it only wants to increase the performance of the sales of every individual under her supervision, however, Betty have forgotten that in an organization teamwork is an important aspect. According to (1998) teamwork develops an element in a broader movement in creating a lean production and workforce that have high commitment in the organization. Betty is not able to impose teamwork because she talks to her subordinates individually. Her goal is somehow unrealistic because her team does not have a strong commitment to the goal, as well as, the team.             The final aspect is time-framed, a goal or goals must have a specific time-table on when it will start and finish. Betty failed in this aspect because she does not have a time-frame, therefore her goal may not be attained because her subordinates do not know when will the goal began, thus some of them may not increase their sales performance. Betty must have a particular time which can be in one year, they would increase their sales.             In conclusion, the goal of Betty Liu is not able to pass the criteria in the SMART goal setting. <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Assessing the strengths and weaknesses of Betty’s approach</li> Betty’s approach has its share of strengths and weaknesses. One of the Weakness of her approach is it does not have enough motivation. She only talks to her subordinate and do not motivate them to aim higher and increase their sales. Another weakness of her approach is that Betty does not have a particular goal in every employee; she just talks to them individually and tells them the same things. Her words to every employee do not have enough power to motivate and raise their performances.             Another weakness of Betty is that she does not involve her employees in the decision-making process; the employees do not have participation. This may hinder the achievement of the goal because some of the employees may not like Betty’s idea. The goal also does not have a time-frame which will make it more difficult to attain and because of that Betty will not be able to measure if the company have attained their desired goal.             On the other hand, Betty Liu also has her strengths as a supervisor. Her strengths include being a nice supervisor. Her choice of words during individual conversations reveals how nice Betty is, it can bear positive effects because of treatment with her subordinates. Another strength of Betty is that she talks to them privately, employees will feel more important because of Betty’s gesture.             In overall conclusion, Betty Liu is a nice and warm supervisor; however her choice of management approach is inappropriate because it lacks teamwork, in a business wherein Betty works teamwork is an important element. The goal is also too broad, at the same time it does not have a particular time-frame. Teamwork should be foster by Betty to enhance their performance, allowing them to participate in the process of decision-making will also be beneficial to the whole organization.                                     Credit:ivythesis.typepad.com

Organizational Behaviour

Comment on Betty’s Approach using the SMART goal setting as criteria Prior to the comment on the approach of Betty Liu in the manage...

Essay about your goals in college and beyond

College years are the most exciting times in life. It is full of options and possibilities. It is important to know what you really want to get from it. You must set your goals as early as possible, but setting up a goal is not enough. You must also set a plan to be able to achieve your goal. Entering college is the last stage in the path of your chosen career. You can envision the fulfillment of your long term plans as you enter in your chosen course. Your dedication and determination of finishing your studies is the key to achieve your personal goals. You may not excel academically but you must engage yourself in the whole college experience.   When we were young, many questioned us of what we want to be when we grow up. For sure, many of us answered, I want to be a doctor, an artist, a lawyer, a businessman or maybe an engineer and as you go along with your chosen career path your simple goals when you are a child became larger as you forward to its fulfillment. Honestly, back in my high school days I was undecided of what career will I have going to college. I listened to every sound opinion from my family and friends of what course will I take up going to college. Finally, I made up my mind and pursue a course a I really like. As I enter college, I’ve got one main goal, just like every college student, I want to finish college and have a degree. I often visualize myself after finishing a degree. At first, I try to adapt myself into my new school, gaining friends with similar interest and joining school organizations so that I could enhance my skill.   As time goes by, I made an addition to my goal, by that time I want to excel academically. I also want to learn more about languages and cultures.   One day, as I read a book in the library I’ve encountered an article about goal setting. It said that I must set a timeframe of when will I fulfill my goals. So I grab a pen and paper and write down my short and long term goals. First on my long term agenda is of course finishing college in time. Second is enhancing my skills in grammar to be able to communicate well both in oral and in writing. Third is having a job that will suit my interest and skills. After that I want to take up a post graduate degree and even a doctorate degree. I also want to have a family of my own but I must be both intellectually and financially stable before doing such. My short term goals are simple but will also help me in achieving my long term dreams. I want to excel academically, I need to enhance my interpersonal skills, gaining more friends, joining different organizations, reading more books to learn more and having a scholarship. After a while, I had fulfilled my short term goal and so I write one after the other. I don’t really get frustrated when I do not achieve my goals in time, for me it is a challenge to strive more. I also ask my friends to set up their personal goals with a given timeline so that they can monitor the achievements they have and what will be their next step in fulfilling their ultimate goals. It is important you keep yourself reminded of your goals regularly. You may check your list every month or at least every semester. Every time you check your list, make sure that your goals are still important to you, because you will be wasting a long time fulfilling it and after that you will see yourself not happy with the outcome. Most successful people always set goals more seriously and sometimes impossible, but in the end because of their determination they make the once think as impossible, possible. Many college students after having a degree ask themselves the question, what‘s next after college? If they only set up their goals earlier then it would be easy for them to move into the real world. I doubt if many of them enhances their skills in preparation for the real world. I think after having their degree without planning for long term goals, they will start from scratch in fulfilling their aspirations. Setting up personal goals early will give an advantage. Do you think I could fulfill all my goals? I can’t assure you of that, but you will lose nothing when you set up goals. Instead, you will be motivated and inspired to reach it as you further move along.     Credit:ivythesis.typepad.com

Essay about your goals in college and beyond

College years are the most exciting times in life. It is full of options and possibilities. It is important to know what you really want...

WHAT ARE YOUR EDUCATIONAL GOALS?

WHAT ARE YOUR EDUCATIONAL GOALS?       All of us have a dream of becoming rich and successful in our lives and no matter how much difficulty we struggle it is almost always that education is the primary key towards success, because knowledge is a powerful tool we can give ourselves and so we need to established a long term plan to reach our goal.       Now that I’m going into a college school I would like to enroll in Penn State University (PSU) because of its high value and commitment in education to take up Electrical engineering course which I am very passionate about. This course will give me the knowledge and aspiration to become one of the best Electrical engineer in town and probably in our country. I would like to invent many innovative devices that will enrich our lives to be a better place. This invention will bring forth changes in our lives all over the world. Like Thomas Alba Edison or Michael Faraday and Nicolai Tesla. In doing so I will strive to study hard and make a difference.        When I graduate from this course I would like to be gainfully employed in a well known company and I shall serve them the best I can to give back the favor they have given me for trusting me and to gain more experience in this field. And when I learned so much I would also like to share my knowledge to everyone who is also interested in this field.       Credit:ivythesis.typepad.com

WHAT ARE YOUR EDUCATIONAL GOALS?

WHAT ARE YOUR EDUCATIONAL GOALS? All of us have a dream of becoming rich and successful in our lives and no matter how much difficul...

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