1.2 Business objectives

business objective

business objective

a specific goal or aim that a business is striving to achieve

• will provide the business with direction, purpose and motivation and increase their chances of being successful.

to make a profit

profit - the amount of money that is left over when a business subtracts its expenses from its revenues

to increase market share

market share - the number of sales a business has when compared to its competitors who are selling a similar product or service.

• usually represented as a percentage figure

to improve efficiency

efficiency - how well a business is able to utilise its resources (natural, labour & capital).

• businesses are continually looking for ways to improve efficiency as this will translate into reduced waste, costs savings and improved productivity

examples of how businesses can improve efficiency

• implementing new technology

• training staff to become more skilful/knowledgeable in their job

• implementing quality improvement strategies

to improve effectiveness

effectiveness - how successful a business has been in achieving its stated objectives.

• it is therefore used as an overarching measurement of how well a business has gone when actual performance is compared against forecasted

examples of improving effectiveness

• Increase profit by 15% Yes / No

• Reduce the number of customer complaints by 5% Yes / No

• Reduce waste by 8% Yes / No

If a business has hasn’t been effective in achieving its stated goals (more No’s than Yes’s) it will look change what it is doing.

to fulfil a market need

a business’s ability to meet/satisfy the needs and wants of customers

an example of fulfilling a market need

Toyota - a car’s main purpose is to get its occupants from A to B safely and quickly. But Toyota has realised that in order to satisfy the needs and wants of customers (aka to fulfil a market need) it will need to provide a number of different makes and models to do this

to fulfil a social need

implies that as result of a business’s activities they are helping to improve society in some way shape or form

example of fulfilling a social need

ThankYou Water - as a positive consequence of selling bottled water, they donate a portion of their profits to water sanitation projects (e.g. clean drinking water initiatives) in developing countries

to meet shareholder expectations

shareholders - part owners of public and private companies

shareholder expectations:

• as a result of investing in a particular business they will see a return on their investment through way of profit distribution (dividends) and capital growth

• they would expect that a business operates profitably, operates in accordance with the law, demonstrates corporate social responsibility etc. in order to meet these expectations

particularly so with public listed companies, that can have tens of thousands of shareholders, meeting shareholder expectations can be a challenging thing to do.

a business will need to balance these financial expectations with other expectations shareholders may have:

• operating in accordance with the law

• minimising the business’s impact on the environment

• treatment of employees