1.2 Business objectives

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

e**xamples 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==