Areas needing objectives by peter drucker

Which are require areas needing objectives? and How can areas needing objectives is important for business. Objectives affect the size, shape, and design of the organization, and they are important in motivating and directing personnel.

Areas Needing Objectives

Peter Drucker, while working as a consultant for General Electric, identified eight key areas in which organizations would establish objective. They areas were :

  • Market Standing
  • Innovation
  • Productivity
  • Physical and Financial Resources
  • Manager Performance and Development
  • Worker performance and Attitudes
  • Profitability
  • Public and Social Responsibility

1. Market Standing

Market standing and innovation are the foundation ares in management, Essentially an organization exists to obtain results in these areas only.

Market standing is a question deciding on the optimum of market share the firm is trying to capture ultimately. This requires a careful analysis of

  • Customers and products or services
  • Market Segment
  • Distribution channels

2. Innovation

In every business there are three kinds of innovations: Innovation in product or service and Innovation in market place and consumer behavior and values and third are Innovation in the various kills and activities needed to make the product and services and to bring them to market.

3. Productivity

Productivity is the ratio of an organization’s inputs to its outputs. All business has the same resources to work with; it is the quality of management that differentiates one business from another.

It must decide as to what inputs of labour, equipment and finances are necessary to produce the firms’s outputs?

4. Physical and Financial Resources

Every business must be able to attract resources :

  • Physical
  • Financial and
  • Human

And put them to productive use to be able to perform well.

Resources mobilization is a two-step process:

  • Anticipating the needs of the business
  • Planning for obtaining the resources in an economical fashion

After mobilizing resources one also has to say “this is what is available; what do we have to be, how we have to behave, to get the fullest benefit?”

5. Manager Performance and Development

In order to stay in and remain profitable every business needs strong, innovative managers. So it is highly important, especially in the case of large organizations, to set objective relating to the quality of management performance, the development of managers at various levels in the organization.

6. Worker performance and Attitudes

Organizations must provide tangible benefits to the individuals working for its continued growth. Thus, workers want wages, managers want salaries, and owners want profits.

Most of the routine or normal work is performed by operative level employees in every organization. Unless goals are established in terms of output per employee, quality of product etc. the organizational activities may be disrupted by labor strife, union problems etc.

7. Profitability

Profit objective are important for accomplishing other objectives like covering risks in the business, ensuring supply of future capital for modernization and expansion and satisfying customer needs.

A fundamental objective of the business firm is to produce and distribute products and services that the customer is willing to buy. Its reason for being is to create value. Profits are essential to the survival and growth of the firm.”

8. Public and Social Responsibility

To achieve the economic objective, a firm must produce the goods the customer wants. If a firm is not able to create economic value for society, it may not stay in business along enough to make a profit.

In recent years social responsibility of business has become a matter of concern for many business undertakings. Here responsibility implies a sense of obligation on the part of the business toward the general public.

Criteria of a Good Objectives

A good objective must be specific. Specificity is a highly desirable quality. Specificity provides direction towards which efforts could be channelized.

An objective must be time bound. To apply work study techniques to methods of working so that 70% of direct employee are achieving 100% performance is of little use as it does not specify the time limit.

An objective should be as measurable and quantifiable as possible. This may not always be possible, but an attempt should be made to formulate the objective in measurable terms.

The other criteria of a good objective are feasibility, rationality and consistency.


At last words, In theory of peter drucker of areas needing objectives are depends of an organization and an organization goal is desired state of affairs which the organization attempts to realize.

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