Edinburgh Hotel’s objectives include:● Corporate objectives: Objectives at a corporate level relate to the organisa-
tion’s overall direction in terms of its general attitude towards growth. At
this higher level, managers of the Edinburgh hotel are likely to be con-
cerned with long-term profitability. (Note: In a not-for-profit organisation
the key objectives are more likely to relate to the efficient use of resources
rather than profitability.) In this case the hotel management wishes to
increase operating profit by 30 per cent over 3 years. The method pro-
posed to achieve this objective is by growing market share to 25 per cent
of the Edinburgh market. At this corporate level expanding market share
becomes a strategy for achieving the organisation’s principal objective.
● Functional objectives: At a functional level expanding market share
becomes an objective. Each functional area: finance, human resources,
operations and marketing will develop a strategy to support this object-
ive. In terms of the marketing function it is concerned about which
products/services should be sold into which markets. At a fundamental
level marketing strategy is about products and markets. In this example
the strategy at the marketing function’s level is to provide the best facil-
ities in Edinburgh for key market segments, provide the best standards
of service and ensure they are adequately promoted.
● Operational objectives: At this level the functional level marketing strat-
egy becomes the objective. Strategies have to be developed for each
element of the marketing mix to support these operational objectives.
This hierarchy ensures that at each level the objectives that are developed
are consistent with the objectives that lie at the level above them.
However there has to be strong co-ordination between functional areas
otherwise conflicting actions may be taken as each functional area con-
ducts independent actions in order to fulfil their objectives. The key cor-
porate objective could be to increase profitability by 10 per cent over the
next 3 years. If independent actions are taken, marketing could develop
strategies to increase sales in order to meet this objective. At the same time
production could be operating at optimum capacity any increase in
throughput would increase its costs. Without co-ordination and commu-
nication functional areas can effectively be working against each other.
In many situations there will be more than three levels to this hierarchy
increasing the complexity of the situation even more:
● Strategic Business Unit (SBU) Objectives: In an organisation with a div-
isional structure this hierarchy will have an additional level of the business
(or S.B.U. level) objectives that will be derived from the corporate level
objectives and strategy and then feed into the functional level objectives.
■ Long-term versus short-term goals
There is some tension between long-term and short-term objectives. Long-
term objectives are an integral part of the planning horizons of up to
Strategic intent 143