CIE As Level Business | 1.4 Business Objectives - Business and Its Environment

Business Aims

A *long-term goal* that a business hopes to achieve.

Mission Statement

A statement of the organization's *purpose* - what it wants to accomplish in the larger environment. It is usually attractive to *appeal to key stakeholders*.

(i.e. Bring the World of Coffee to Every Neighbourhood)

Business Objective

A stated *measurable target* that a business plans to achieve.

Business Strategy

A *long-term plan of action* for a business, designed to achieve a particular objective.

Tactic

A *short-term action* as part of an overall strategy.

What is the *role of objectives* in businesses?

- Provides a *sense of direction*

- Provides *specific targets* to avoid unnecessary decisions that do not help achieve targets.

- Provides a *success criteria* to better measure outcomes.

What are the factors that may cause business objectives to change over time?

1. *MARKET CONDITIONS*

—> Uber and Lyft shifted from *market share* to *profitability* as competition increased.

2. *TECHNOLOGY*

—> Amazon shifted from *market share* to *market development* as technology developments slowed them to expand to a range of retail categories.

3. *PERFORMANCE*

—> Ford shifted from producing passenger cars to more SUVs and trucks to *improve sales & profitability*.

4. *LEGISLATION*

—> With the passage of the Affordable Care Act in 2014, healthcare providers had to adjust their aims and objectives.

5. *ETHICS AND SOCIAL CHANGE*

—> Change in attitudes towards social issues / what is considered right & wrong may force a business to change its objectives.

6. *INTERNAL REASONS*

—> Satya Nadella (Microsoft CEO 2014) shifted company's focus from software to cloud services.

Private Sector

The part of the economy that involves the transactions of *individuals and businesses*.

What are the objectives of the private sector?

1. Profit maximisation

2. Growth

3. Ethics and social responsibility

4. Survival

5. Protecting shareholder value

Public Sector

The part of an economy that is controlled by the government.

What are the objectives of the public sector?

1. Provide *reliable* and *efficient services*

2. Meet *performance targets* set by the government

3. Encouraged *social* and *economic development*

4. Create *jobs* and increase *employment levels*

Social Enterprise

A business (within the private sector) with *social objectives* rather than maximising profit as their main focus.

What are the objectives of social enterprises?

1. *SOCIAL*

—> To provide jobs and support for disadvantaged groups in society, such as the disabled or homeless.

2. *ENVIRONMENTAL*

—> To protect the environment

3. *ETHICAL*

—> To operate the business in a responsible way

4. *FINANCIAL*

—> To make a profit to invest back into the social enterprise to expand the social work that it performs.

Corporate Social Responsibility (CSR)

When businesses consider the *interests of society* by taking responsibility for the impact of their decisions on *customers, employees, communities*, and the *environment*.

What are the reasons for implementing CSR?

1. *Improved reputation*

—> CSR can enhance the business's image + reputation

2. *Added value*

—> CSR can be a USP to justify *premium pricing*

3. *Employee morale and motivation*

—> Workers may feel more connected to a business that 'does the right thing'.

4. *Solve social problems*

—> E.g businesses that look to minimise the use of fossil fuels make a small contribution towards efforts to combat climate change.

Ethical code (code of conduct)

A document detailing a company's rules and guidelines on staff behaviour that must be followed by all employees

Pressure Group

Organisations created by people with a common interest or aim who put pressure on businesses and governments to change policies so that an objective is reached.

The Triple Bottom Line

The measure of a business's performance in relation to:

- *Profit* (its finances)

- *Planet* (its environmental impact)

- *People* (social responsibility)