1.3 - Setting Business Aims and Objectives

What are aims?

The overall goals and purposes that the business was set up to fulfil

What are objectives?

Specific targets a business must achieve if it is to fulfil its aims

What is survival?

A short term aim, typical for start up businesses, or when a new firm enters a market. Often set at a time of crisis

What is profit maximisation?

To make the most profit possible by increasing revenue or decresing costs (or both)

What is growth?

To expand the business possibly by opening up new sites in different locations in this country or abroad

What is market share?

To increase the volume or value of sales, measured as a percentage of the entire market

What is customer satisfaction?

To keep customers happy through good service or better products that the competition

What are social and ethical aims?

To help society as a whole - to make sure the business has a positive effect on others

What is shareholder value?

Ensuring an adequate reward to the shareholders for investing in the business

What can the aims set depend on?

The aims set will depend on the type of business

What objective would a donkey sanctuary have?

A particular cause: To rescue donkeys who have reached the end of their working lives.

What objective would a small budget hotel have?

To grow in size: small businesses usually wish to increase their size in the future to generate more revenues

What objective would a start up have?

To survive: new start ups will find it difficult to compete

What objective would the body shop have?

For ethical/environmental reasons: to do the right thing and preserve the environment

What objective would volkswagen have?

To increase market share in a highly competitive industry

What is a mission statement?

This contains the ‘vision’ of the business and explains why the business exists. 

Why do businesses set objectives (4 reasons)?

Purpose + Direction, Targets, Decision-making, Monitoring

Purpose + Direction - Provides a framework around which to create plans

Targets - Businesses can set targets to monitor progress with an overall plan

Decision-making - Managers can make decisions based on what the business is trying to achieve

Monitoring - Monitor performance against a set of criteria

What is a SMART objective?

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Give some examples of aims

- Survival
- Profit maximisation
- Growth
- Market share
- Customer satisfaction
- Social and ethical aims
- Shareholder valeu

Give some examples of objectives

- A particular cause
- For ethical/ennvironmental reasons - to do the right thing and peserve the environment
- Survival
- Break-even
- Expansion
- Brand identity
- Profit
- Expansion
- Diversification
- Market share
- Higher proits

Businesses could judge their success in a number of ways depending on the objectives that have been set, including: