Business Objectives Flashcards

Business Objectives

Learning Objectives

• Understand the financial aims and objectives of businesses:
  • Survival
  • Sales
  • Profit
  • Market share
  • Financial security
• Understand the non-financial aims and objectives of businesses:
  • Social objectives
  • Personal satisfaction
  • Challenge
  • Independence and control
• Understand why business objectives change in response to:
  • Market conditions
  • Technology
  • Performance
  • Legislation
  • Internal reasons

What are Aims & Objectives

• Every business has a distinct set of aims and objectives.
• Aims: are the long-term visions or goals of a business.
• Objectives: are specific, measurable targets to help to achieve the overall aims of the business.

The Importance of Clear Objectives

• Businesses are most likely to be successful with a set of clear objectives.
• Reasons for needing objectives:
  • Employees need something to work towards for motivation.
  • To determine where to take the business and what steps to take to get there.
  • Easier to assess the performance of the business.

Financial Objectives

• Survival: One of the most important objectives for a business.
• Profit: To make as much money as possible.
• Sales: To increase and grow sales.
• Increase Market Share: Businesses want to increase their market share and win customers back from competitors.
• Financial Security: Some businesses may just want to make enough money to get by.

Non-Financial Objectives

• Social Objectives
  • Public sector: Designed to improve human well-being. Most businesses provide a public service. Objectives are linked to the quality of service and reducing costs.
  • Social enterprises (not for profit): Aim to improve human and environmental well-being. Usually have a clear social or environmental mission. Example: Improving the quality of education in developing countries by collecting and distributing old textbooks.
  • Some businesses attempt to improve social responsibility by considering the needs of stakeholders, providing employment for locals, reducing pollution, and making contributions to the local community through sponsoring events or visits to schools.
• Personal Satisfaction
  • Owners enjoy risk-taking and seeing their ideas succeed. Investing money into a business idea and seeing it develop and succeed is satisfying and a matter of great pride.
• Challenge
  • People are motivated by challenges, such as starting a business. To succeed in business, you must be committed, hard-working, and multi-skilled in areas like organization, financial management, communication, decision-making, negotiation, IT, and people management.
  • Once a business becomes successful, owners set new challenges, such as growing by selling overseas or investing in developing new products.
• Independence and Control
  • Being your own boss and being in control is a key benefit of being an entrepreneur. Freedom to make all decisions, although this is limited in practice as banks lending money need to be satisfied that the business is doing well.

Financial vs. Non-Financial Objectives

• Financial:
  • Survival
  • Market Share
  • Profit
  • Sales
  • Financial Security
• Non-Financial:
  • Challenge
  • Social Objectives
  • Control
  • Independence
  • Personal Satisfaction

SMART Objectives

• Specific
• Measurable
• Achievable
• Realistic
• Time-specific
• Example:
  • Business to increase revenue by 8\% in the next 12 months.

Why Objectives Change

• Over time, businesses have to respond to changes in circumstances, including:
  • Market conditions
  • Technology
  • Performance
  • Legislation
  • Internal reasons

Small Businesses vs. Large Businesses

• Large businesses employ over 250 employees.
• Small businesses employ under 50 employees.
• Objectives differ for small and large businesses.

Mission Statements

• Written by businesses when setting objectives.
• Describes the purpose of the business.
• Directed at stakeholders, including customers, employees, and shareholders.
• They help a business to focus, provide a plan for the future, and make clear to all stakeholders what the business is trying to achieve.

Example Mission Statement (NBA)

• "We aim to provide the highest quality of education possible for all our students. In doing so, we aim to positively encourage each student to achieve academic excellence, enjoy diversity, develop critical thinking skills, and become lifelong learners and responsible citizens."
• "To achieve this, we will provide a diverse education in a safe, supportive environment that promotes positive discipline and self-motivation. We will provide and maintain a trusting and caring atmosphere where teaching and learning is meaningful and developed. We will work in partnership with our staff, students, parents, and wider community to achieve our vision."