Studied by 6 peoplewhy do businesses have objectives
employee motivation
to motivate owners
help decide business decisions
to assess performance
what kind of objectives do businesses in the private sector usually have
financial
financial objectives
survival
profit
sales
increased market share
financial security
survival
businesses are vulnerable at the beginning
businesses may have a core objective of survival during the first few months
is also threatened when competition enters the market or trading conditions worsen
profit
businesses aim to make a profit for financial return
some want profit maximisation
shareholders try to maximise profit for large dividends
sales
some owners want businesses to grow sales
high sales mean more benefits
growth of a business affects stakeholders
what are the benefits to a business of increased sale
lower costs
larger market share
higher public profile
generation of wealth
increased market share
business want a large market share for a higher profile
helps win customers from competitors
helps dominate the market
businesses can charge higher prices
easier to launch new products
financial security
profit satisficing
don’t want to expand their business
some run ‘lifestyle’ businesses
allows owners to spend time away from the business
can businesses have non-financial and financial objectives
yes
non-financial objectives
social objectives
personal satisfaction
challenge
independence and control
social objectives
important in the public sector
designed to improve human well being
provide a public service
link to quality of service and reduced costs
social/environmental missions
some businesses improve social responsibility to take into account stakeholder needs
personal satisfaction
some owners set up a business for happiness and satisfaction
they enjoy taking risks and success
some of these are a business
challenge
some people are motivated by challenge
requires commitment, hard work and multi-skill
business owners need several skills and be ready to face challenges
independence and control
some owners want control
driven by desire for independence
freedom to make decisions
key benefit of entreprenuership
SMART objectives
specific, measurable, achievable, realistic, time specific
why do business objectives change as businesses evolve
market conditions
technology
performance
legislation
internal reasons
market conditions
new objectives are important when market conditions change
new competitors, rivals introducing new products, economic decline
businesses have to prioritise objectives depending on their situation
technology
businesses may have to adjust their objectives depending on technological advancements
businesses may go under pressure to sell more to exploit economies of scale
performance
linear
sustained profitability isn’t always constant
performance levels affect objectives
legislation
businesses need to cater to environmental, employment or consumer legislation
businesses have to consider needs of a wider range of stakeholders
internal reasons
businesses can change their objectives for internal reasons like change in ownership or management
objectives of a small business
may be content staying small
may want to avoid responsibility with growth
interested in non-financial objectives
objectives of a large business
aim for profit
aim to expand and grow
financial objectives
Note
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