1.5 Different business aims and objectives

What are business aims and objectives

Aims are statements made in the strategic plan for the organisation that they want to achieve i.e. we aim to………

Objectives are more specific statements describing how they are going to achieve those aims.
Example - My aim is to be on time every day. I will achieve that by taking these actions:
1) setting an alarm 10 minutes earlier than my current time
2) packing my college bag the night before
3) avoiding social media before I leave the house

Aim 1 - Survival

New businesses
During a recession or economic crisis

When a business is first started their aim is likely to be to keep going, or survive, to begin with. They will then change their aims once they have successfully kept the business going for a period of time.
This may also be the case for existing businesses during a recession (two quarters of negative growth - may be better to explain as low sales until this is explained in the economics unit). They will just want to survive the crisis and then change their aims once they know they are still going to exist.

Aim 2 - Financial

Break even
Increase income (revenue)
Reduce costs
Make a profit

Each organisation is likely to have an aim related to finance.
The first financial aim is to break even i.e. for income to equal costs, no profit or loss made. New businesses may have this as an aim as part of their plan to survive the early years. Public and third sector organisations will also often have this as an aim as they are organisations that are created to provide a service not to make money.
The second financial aim is to increase income i.e. make more money. This can be done by selling more goods OR increasing prices and selling the same amount OR both. The business will need to consider who the extra customers will be if they want to sell more goods. They will also need to research if their current customers will be willing to pay more if they are thinking of putting up prices.
The third financial aim is to reduce costs i.e. spend less on running the business. Organisations in the private sector will often use this to make more profit. Public and third sector organisations may have this aim so they can offer even more services or a better standard service with the same income.
The final, and most obvious, aim is to make profit i.e. have money left over from income after all the costs have been deducted. This is more likely to be a private sector aim.

Aim 3 - Growth

Physical expansion
Greater market share
Increased provision
Diversification

Growth means making the organisation larger. There are a number of ways they can do this:
Physical expansion means more factories or shops. This would tend to be a private sector
Greater market share means increasing the number of customers/sales (by stealing them from competitors). The “market” is the total number of customers that would potentially buy products from the business and their competitors. Businesses compete with each other for the custom of these individuals.
Increased provision means providing more types of services or providing the service for more customers. This is likely to apply to public and third sector organisations e.g. a hospital will aim to increase the number of patients they see in a year.
Diversification means to try to produce new products or services so that the business is not relying on one item to bring in all the income.

Aim 4 - Reputation

Products/services
Good customer service
Ethical/ social/ environmental reasons

Aim 5 - Be enterprising

Be own boss
Pursue own interests
Be competitive

Sometimes a business will have an aim that relates to the owner’s desire to be enterprising. The owner may want to run their own business and make their own decisions i.e. be their own boss or pursue their own interests or ideas. They may also want to be competitive i.e. compete with similar businesses and have some success.

What is strategic planning?

This is planning for the whole organisation, setting out its aims, objectives and the major resources that will be used to achieve these.

Most large businesses will have a mission statement which sets out the purpose of the organisation and will underpin the strategic plan