Ch. 4 - bussiness objectives

What are business objectives?

The aims or targets that a business works towards.

Main business objectives

Survival, profit, growth, market share, service to community.

What is survival?

Continuing to operate in difficult conditions.

What is profit?

Money left after total costs are subtracted from revenue.

Why is profit important?

Reward owners, finance growth, survival.

What is growth?

Increase in size of the business.

What is market share?

The percentage of total market sales held by one business.

Formula for market share

Sales revenue of business ÷ total market sales × 100.

What is meant by providing a service to the community?

Supporting society through jobs, fair trade or environmental protection.

Why are business objectives important?

Provide direction, motivate workers, measure success.

What is a stakeholder?

A stakeholder is any person or group with a direct interest in the performance and activities of a business.

Internal stakeholders

Owners, managers, employees.

External stakeholders

Customers, suppliers, lenders, government, local community.

Objectives of owners

Profit and growth.

Objectives of employees

Job security, wages, good working conditions.

Objectives of customers

Good quality and value for money.

Objectives of government

Employment, tax revenue, economic growth.

Objectives of lenders

Interest payments and repayment.

Why might stakeholder objectives conflict?

Different groups want different outcomes.

Examples of stakeholder conflict

Higher wages vs higher profits, lower prices vs higher profits.