3.3.1 Objectives of the organization

The development of management is the result of many factors that act both in the external environment and within the organization itself. Despite the ever-increasing importance of external factors, internal are still decisive in the functioning and development of the organization. Moreover, they are objects and subjects of management. In the management literature, there is a certain variation in the approach to this issue, in defining the structure of the internal components of an organization. A number of approaches can be distinguished when they single out the structure of a corporation, its culture and resources as the internal environment ¹ ; goals, structure, objectives, technology and people ² .

Sometimes, analyzing the internal environment of the organization, they talk about the potential of the enterprise - management and production or economic ³ . Analysis of the theory and practice of management involves considering the internal environment as a dynamic phenomenon, i.e., consider the internal environment factors as variables in their development. Internal variables are situational factors within an organization that are mostly controlled and regulated. The main variables of the internal environment of the organization are: goals: structure, labor resources, equipment, inventories, technology, organization culture ^* .

A firm or commercial organization has its main, strategic goal of making profit ⁴ . This is her key indicator.

However, the achievement of the main goal is connected with the need to produce goods and services for the market. And not the production at all, but the production of only those products and services that are necessary for the consumer. In this case, the management solves three tasks: making a profit, reducing costs, expanding the market segment.

There are three main types of orientation of the company to profit: 1) its maximization; 2) obtaining a satisfactory profit; 3) minimizing profits.

1. Profit maximization . The meaning of this orientation is to obtain the highest possible profit in every business transaction both from internal reserves and from (choice) of buyers. This goal can not be considered justified in terms of its social consequences. Therefore, as a long-term strategy of ^{* a} firm, it is used in this form relatively rarely. But for a short-term, tactical task, this orientation is used mainly in areas of rapid economic growth. The policy of maximizing profits for all activities may be legal from a legal point of view, if the position of the company is not monopoly.

2. Getting a satisfactory profit. This strategic goal, the essence of which is that when planning a profit, it is considered satisfactory if the degree of risk is taken into account. The benchmark for the firm in this case becomes the profit that could be obtained by applying the existing capital in some other industry. Satisfactory profits tend to decline to a level that does not attract too many competitors in this industry, but it does not require the intervention of bodies that ensure that the company's position in the industry does not become a monopoly.

3. Minimizing profit. One of the important tasks of the management is to create the conditions necessary for the further successful functioning of the organization. That is why the basic principle and guideline of management is not profit maximization, but successful elimination (elimination) of the influence of risk situations. One or another operation of the organization should bring such a profit that would allow to accumulate enough funds that create a real opportunity to overcome the possible risks of the future. When following this option, the orientation tends to achieve maximum profit, but not in all positions, as in the first case. When making decisions, it is taken into account not only the degree of risk, as in the second case, but also the need for insurance against possible losses. Therefore, this option means maximizing the minimum expected income along with minimizing the maximum loss.

Sometimes the goal of the company is determined by non-profit motivation. This does not mean that the firm is not interested in its financial affairs. As in previous cases, a firm can exist only in terms of its profitability. Only instead of maximizing income, the growth in the rate of profit is expressed in other indicators:

• customer satisfaction or user services;
• market position, often associated with a desire for market leadership;
• conditions of welfare of workers and the development of good relations among the staff;
• public responsibility and image of the organization;
• technical efficiency, high level of labor productivity, emphasis on research and development;
• minimization of production costs, etc.

Indicators and deficiencies in the formulation of some goals of the organization are given in Table. 2.4.

Achieving profits as a strategic goal is carried out, as already mentioned, taking into account adaptation to the external and internal business environment. Therefore, in each specific period of time, a firm can set goals that are derived from strategic objectives. In addition, goals and objectives differ in terms of time and functions, i.e., their own tasks are assigned to each functional area of ​​management and, therefore, to the relevant departments.

As it is known , in accordance with the general management functions, management is divided into three components: production management, marketing, and financial management ^* .

Production management, in turn, is subdivided into a number of functional areas: production, personnel management ^* (sometimes it is considered as a separate component of management), technical service, supply, research and development, personnel service, each with its own strategic orientation, its specific goals (Table 2.5.)

T a b e and c a 2.4

Objectives of the organization

Good organization of production does not guarantee automatic success of the company. However, with poor organization it is impossible to achieve success, because the cost of production is usually 50-70% of the price of products sold.

T a b l and c a 2.5

Orientation of various functional areas of management

It is quite obvious that production targets are mainly determined by the consumer and are closely interrelated with marketing and financial management. To determine the goals of management, five conditions can be identified for the sale of goods or services in which the consumer is interested: 1) functional purpose and quality; 2) quantity; 3) price; 4) delivery time; 5) service.

1. Functional purpose and quality. When purchasing a car, you need to be sure that it has an acceptable quality. At the same time, the car must perform the required functions and be on the move in various conditions. Of course, this is the most important thing. The functions that the product can perform should be consistent with the customer’s perception of them. And the quality of the product must be such that the functions are performed with a certain reliability.

Compliance of products with the necessary standards for quality and functionality is checked in the company by a special group engaged in new products. The design solution should provide the functionality of the product, and as a result of the production process, the product should be obtained that corresponds to the design solution.

1. Amount. The consumer needs a completely certain amount of goods and services. For example, if too few locomotives are used, this leads to the downtime of other vehicles, if, on the contrary, too many - to an unreasonable increase in the cost of railway services. There is always the problem of matching the quantity of products to the quantity required in the market. Overproduction leads to losses, and underproduction - to the loss of potential profits.

2. Price. Most consumers are limited in their incomes and therefore they can pay only a certain amount for certain goods. For example, the price of rail transportation should be comparable to the prices of competing transportation services, road or air. If prices are too high, the consumer will prefer alternative transportation. In addition, management should be focused on cost reduction. On the basis of the cost calculation and control system, cost saving measures are implemented.

3. Estimated delivery time. The buyer wants to get a particular product or service at a certain time. Buyer's requirements for delivery times should be taken into account when setting deadlines for the execution of works. Each order must be completed within a certain time. This requires monitoring the performance of all operations carried out continuously or on schedule. Information should be provided on what has not been done on time and why, what has been done ahead of time, what are possible ways to correct the defects.

4. Service. This concept is included in the obligations of the company to repair or replace individual parts of its products in case of unsatisfactory work. That is, the company assumes responsibility for maintaining the performance of the product during the entire period of operation.

The role of the manager is to achieve all of these listed goals as efficiently and effectively as possible. Peter F. Drucker, in this regard, noted that performance shows the degree of achievement of the required goals at minimal cost or effort ⁵ . With effective leadership based on the use of a fixed amount of resources, a large volume of production is obtained. However, it is more important for the manager to correctly define the goals for which it is necessary to focus the activities of the company. The correct choice of goals determines the effectiveness of the activity. An efficient manager ^* does the right thing, and a manager who acts effectively does the right thing. Without efficiency, performance means little. You can work very productive for some time, but the wrong choice of goals leads to zero effect.

It should be noted that, along with the objectives, the tasks are also defined, i.e. the work instructions that must be performed in a predetermined manner within a predetermined time frame. Tasks are prescribed not for the employee, but for positions and are reflected in the job description and are considered as a necessary contribution to the achievement of the goals of the organization.