Business - 1.4 Business Objectives

Private Sector

Owned and operated by individuals, main objective is profit and is funded by investors, debt and retained profit

Public Sector

Organisations owned by the government, very infrequently make profit, funded by taxpayers and provide public services

Profit maximisation

Maximising value added and achieving the highest possible difference between total revenue and total costs

Profit satisficing

Achieving enough profit to keep the owners satisfied

Growth objectives

A business that does not attempt to grow could become uncompetitive, through growing too much, or too quickly can lead to problems

Rapid expansion

Causes cashflow problems, increases financial risk, results in lower sales prices to meet targets

Increasing market share

Making more sales than competitors can indicate successful marketing strategy and an effective business plan

Corporate Social Responsibility (CSR)

When businesses consider the impacts of and take responsibility for their decisions on other stakeholders

Reasons for objective change

Response to competition, financial underperformance, business growth/expansion, change in business environment, leadership/management and stakeholder priorities

Mission statement

A statement of the business’ core aims, phrased to motivate employees and appeal externally

Triple Bottom Line

Assessing success by profit, people and planet

SMART Goals

Specific, Measurable, Achievable, Relevant, Time Bound