^^Business Objectives^^ : A business objective is an aim or a target that a business collectively works towards
When a company has been recently set up, or when the economy is moving into recession, they are more concerned about survival about all else. New competitors also cause insecurity
When owned by private individuals rather than the govt, the business’ main goal is profit. Owners each take a share of the profit.
Pay a return to the owners of the business for the capital invested & the risk taken
Provide finance for further investments in the business
Shareholder own limited companies, the managers if of companies will often set the objective of ‘increasing' returns to shareholders’. This is done to discourage shareholders from selling their shares & helps the managers to keep their jobs
May aim for growth in size of the business - usually measured by value of sales or output - in order to:
Make jobs more secure
increase the salaries & statuses of managers
Open up new possibilities to spread the risk of the business (conglomerate integration) by moving into new markets
Obtain a higher market share from growth in sales
obtain cost advantages, called economies of scale, from business expansion
Growth will only be achieved if the customers are satisfied with the product or services being provided. It is important to put meeting customers’ needs as a very high priority
Market share % = (company sales / total market sakes) x 100
A social enterprise has social objectives as well as am aim to make a profit to reinvest back into the business
Social enterprises are operated by private individuals
Stakeholder groups | Main features | Most likely objectives for the stakeholder groups |
---|---|---|
Owners (internal) | They put capital in to set up & expand the business. They will take a share of the profits if the business succeeds. If the business doesn’t attract enough customers, they may lose the money they invested. They are risk-takers | Share of the profits so that they gain a rate of return on the money put into the business. Growth of the business so that the value of their investment increases |
Workers (internal) | Employed by the business. Have to follow instructions of managers & may need training to work effectively. May be employed part-time or full-time & on a temporary or permanent basis. May be made redundant & told to leave the business, if not enough work for them. | Regular payment for their work. Contract of employment. Job security - workers don’t want to look for new jobs frequently. Job that gives satisfaction & provides motivation. |
Managers (internal) | Also employees, and control the work of other workers, Take important decisions, which if successful may lead to business expansion. However, if unsuccessful, business may fail. | High salaries because of the important work & decision making. Job security. Growth of the business so that they can control larger & better known business. This gives them more power & status |
Customers (external) | Without enough customers a business will fail. Most successful businesses often find out what consumers want before producing goods & services (Market research) | Safe & reliable products. Value for money. Well-designed products & good quality. Reliability of service & maintenance |
Government (external) | Responsible for the country’s economy. Passes laws to protect workers & consumers | Wants business to succeed in it country, as successful businesses employ, pay taxes & increase country’s output. Expect all firms to stay with the law - law affects business activity |
The whole community (external) | The community is greatly affected by business activity. Factories might pollute rivers, seas & air quality. Businesses also create jobs & allows their workers to improve their living standard. | Jobs for the working population. Production that doesn’t harm the environment. Safe products that are socially responsible |
Banks (external) | They provide finance for the business’ operations | Expect businesses to be able to pay interest & repay capital lent → Businesses must remain liquid |