Start with Drucker’s eight goals to perfectly formulate the company’s plan for the new year

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At the turn of each year, **small businesses conduct a review of the past year and make plans for the coming year. Most entrepreneurs’ reports focus on the good news rather than the problems, and their plans are often grandiose; whether they can be realized is another matter. This is probably the true reality behind most companies’ annual meetings. For a company, if it has no goals, where does management come from? Without the right goals, how can management be effective? A company’s goals are not unique. Some business owners believe that profit is the only goal of corporate management. Drucker believed that this view is incorrect; business management cannot have just one goal. So what goals should business management have? Drucker said that there are eight goals in business management. 1 Marketing objectives: The first objective of business management is the marketing objectives. In the field of marketing, how should businesses position themselves? How is the company’s business positioned in the market? How do you plan to compete with peers? Who are the enterprise’s target customers? These are all issues that need to be taken into account when setting marketing goals. Drucker believed that there are two aspects of marketing objectives that are the most important. The first important aspect of marketing objectives is that a company must first ask itself: “In which battlefield does it intend to fight?” ”In other words, it refers to which industry the company intends to enter. Do they sell clothes or furniture? Do they sell home appliances, or other things? It’s essential to identify the target market first; don’t try to sell everything, thinking that’s the right approach. In fact, in the minds of customers, such a corporate positioning is vague. The second important aspect of marketing goals is that a company should have a clear understanding of its own position. Once a company decides on which industry it intends to enter, does it necessarily have to strive to become a leader in that industry? Drucker said, no, that’s not the right way to think; no company can become a true leader in just one area. If any do exist, they are brief. Companies should have a clear understanding of their own position. What kind of style does the company want to establish in this market segment? What kind of market does the enterprise face? What kind of products or services does the company want to offer? What kind of industry position should a company achieve? In other words, enterprises must have a clear understanding of their own positioning within the industry. A company’s positioning must be relatively easy to focus on. It’s unrealistic for a company to aim to be a leader in every aspect of an industry. The key is for the company to determine in which specific area of the industry it intends to become a leader. Taking Haier Group as an example, it positions itself as a leader in the field of white goods; in other words, Haier aims to become a global leader in the washing machine or refrigerator market. Doing this is the right thing to do; this is the correct approach. For a company, these two aspects must be thought through first. If you haven’t thought it through, you’ll fight in a confused manner, not knowing why you’re fighting or for whom. Ultimately, it will turn into a chaotic battle; it will become an unmanageable war. Once the industry in which the company intends to enter and the company’s position in its future development have been determined, it is necessary for both the company’s managers and employees to have a clear understanding of these two aspects and reach a consensus. Otherwise, contradictions will arise, leading to many problems. 2 Innovation Goal The second goal of business management is the innovation goal. Drucker believed that there are three patterns of innovation. The first model is innovation in products and technology. The second model is process innovation, which can also be referred to as “management innovation”. In other words, it involves connecting the company’s products, technologies, and services with end customers, thereby narrowing the distance between the company and its customers. Methods like \"pyramid schemes\" connect products (services) directly with the market, thereby shortening the distance between businesses and end consumers and fostering a relationship of trust between them. The third model is social innovation. What is social innovation? Management is the greatest innovation of the 20th century, as well as the greatest social innovation. Drucker invented management theory, which is a prime example of social innovation. What does social innovation mean for businesses? The starting point for businesses to pursue social innovation is to benefit customers by providing them with better products or services and an improved shopping experience. If the products or services provided to customers satisfy them greatly, they will naturally be happy to accept them. The Amazon website is a typical example of social innovation. How does Amazon do it? When readers purchase books on Amazon, the website reminds them that in addition to the book they want to buy, Amazon can also offer a few other books for their reference. As a result, many readers end up buying two or three extra books when they purchase books. This makes it easier for readers to purchase books, and it also allows both Amazon and book publishers to reap greater benefits, as whether 1 book, 3 books, or 7 books are given away, the delivery staff still needs to make one delivery to the customer. This is Amazon’s social innovation. 3 Human Resources Objectives The third objective of business management is the human resources objective. Why set human resources goals? Because people are the most valuable asset. Although a company’s financial statements do not show the value of any individual within the company, a company’s operational performance reflects the way its human resources are utilized. Labor is not a cost; in other words, labor should not be seen merely as a cost within a company. Human resources are a resource. By viewing human resources as a resource and knowing how to make good use of it, by leveraging people’s strengths and enabling employees to achieve high levels of productivity and excellent performance, costs can be reduced, or even eliminated altogether. Human resources represent the opportunities for a company’s existence, and developing people’s strengths is essentially about maximizing the use of those opportunities. 4 Financial Resources Objective: The fourth objective of business management is the financial resources objective. Should targets also be set for financial resources? Of course. When setting financial resource goals, short-term, medium-term, and long-term financial plans, cash flow conditions, investment arrangements, and asset-liability levels must all be taken into consideration. Enterprise managers must pay attention to the three key financial statements of a company: the balance sheet, the income statement, and the cash flow statement. Without carefully analyzing these three major financial statements, it is impossible to fully understand a company’s financial condition, and thus it is not possible to allocate the company’s financial resources in an appropriate manner. In companies, such situations sometimes even occur. The manager asked the finance officer, “How much money does our company still have?” ”The finance officer said, “I don’t know; let me check.” ”After reading it, the finance officer still didn’t understand, because he was not familiar with the company’s financial situation. Therefore, we can see that without setting financial resource targets for a company, its financial management becomes chaotic. Financial staff play an important role in setting financial resource targets for a company, but many companies never consider the need to set such targets; as a result, their financial staff are only responsible for collecting payments, following up on debts, and recovering amounts owed, without handling any other tasks. For them, the responsibilities related to finance seem to consist only of doing these tasks; it seems there are no other duties at all. Actually, it’s not. Some company accountants are able to keep an eye on financial resource targets, and over time, such accountants will become financial directors. Financial professionals can gain experience, accumulate knowledge, and grow through their work; at the same time, they also need to update their knowledge. Financial professionals should often ask themselves whether they have a thorough understanding of relevant areas such as tax law and a company’s cost structure Or have you thought about it carefully yourself? Have you continued your education since then? Have I improved in my work? 5. Physical Equipment Objective: The fifth objective of enterprise management is the physical equipment objective. It is worth noting that many companies do not know exactly how many physical devices they have, and some even have no idea what physical devices are. So, what is a physical device? Let’s give an example to illustrate. For example, the office buildings in a company are physical devices; likewise, the computers in a company are also physical devices. The schools and other service facilities built within a company are all physical devices as well. Regarding aspects such as the construction (purchase) or transfer (sale), as well as the use and maintenance of such physical assets, enterprises need to establish objectives for them. For new factory buildings, does the company intend to build one factory or ten? For the products to be manufactured, should a company control the core technologies involved, or should it outsource everything to other manufacturers? These are all issues that corporate managers need to consider carefully. As a company grows larger, is it the right goal to handle everything by itself using physical equipment? Here is an example. McDonald’s has over 30,000 stores worldwide, but does it have its own bread manufacturing plant? No, because McDonald’s believes that there’s no need to make the bread in-house; it’s sufficient to obtain it locally. As long as the quality of the bread can be controlled and the suppliers can deliver on time, that’s enough. Why go through the trouble of making it yourself? It’s like this: if someone wants to drink milk, does he necessarily have to raise a dairy cow? It’s not necessary. The principle behind this is actually very simple, but most people prefer to establish a ranch, hire some workers, and raise a herd of cows. Cows produce milk, and people drink it. Only in the end do we realize that the operations keep expanding. I remember Drucker telling a very classic story. He said, “When a company is first established, it’s like a person living in a house.” Later, this man got married and had children, and he began to expand the house. Add a room on this side, and build a main entrance on the other side. And so, after several decades, he would suddenly realize, strangely enough, that this house now had 36 rooms As a result, if he wanted to use the restroom, he needed a guide dog to take him back to his room. ” What does this story illustrate? It illustrates that as a company grows over time, or evolves into a large organization, its operational efficiency often **decreases; in fact, it may even need the help of a dog, a guide dog, to find its way. Therefore, a company becoming larger doesn’t necessarily mean it’s doing better; in fact, some companies lose their ability to operate independently due to their sheer size. 6 Productivity Goal The sixth goal of business management is the productivity goal. What are the productivity goals? Is it individual productivity, or overall productivity? What is the standard for productivity? Should we follow industry standards or national standards? Even, is it necessary to follow global standards? Since the standards followed are different, the productivity produced is naturally also different. In the Samsung Group in China, the productivity per person can reach as much as 4 million RMB on average. In many companies in mainland China, each employee’s productivity is only 2 million RMB, or even at most just 1 million RMB. With such a large gap, how can they compete with Samsung? If one’s productivity is lower than others’, how can they perform better? If everyone’s productivity goals are not met, the overall productivity goal cannot be achieved. Even if some companies achieve their overall goals for a short time, it is temporary and not guaranteed. 7 Social Responsibility Goals The seventh goal of corporate management is the social responsibility goal. Companies need to set goals for the social responsibilities they wish to undertake. For example, what can businesses do to help children who are out of school? How can businesses make contributions to the community? These are all issues that companies need to consider, as well as things they can do. These are called social responsibility goals. 8. Profit requirement target: The eighth goal of business management is the profit requirement target. Why is it called a “profit requirement” goal rather than a “profit” goal? Because a company’s profits must be kept at a minimum level; profits themselves are an essential requirement for a company. What is needed? It is the profit that a company must earn in order to survive and operate properly; therefore, it is necessary to set targets for this profit that needs to be obtained. The eight objectives of business management mentioned by Drucker – marketing objectives, innovation objectives, human resources objectives, financial resources objectives, physical assets objectives, productivity objectives, social responsibility objectives, and finally the profit objective – require three types of balance to be achieved. First, these eight goals need to be balanced with the company’s actual capabilities ； Moreover, a balance must be struck between the current needs of the goal and its future needs ； Also, the various goals must be balanced with one another; in other words, each goal needs to be in balance with the other seven goals. Only by achieving these three balances can we have true management – management that truly conforms to the modern business philosophy. It doesn’t seem that easy to achieve all of this. Whether they are listed companies or unlisted companies, most of them do not consider things this thoroughly. To be honest, it’s already amazing to be able to take two or three of them into consideration. It’s no easy task for businesses to take all eight of these goals into account It is said that Toyota takes all eight of these goals into account in its business operations. It is evident that companies capable of doing this can reach new heights. If a company can adhere to these eight aspects of management by objectives, it means that its management has reached an international standard, indicating that the company possesses strong competitiveness. This is something that businesses need to do, and it’s also worth discussing together. Source: Internet