Business Objectives | VCE Business Management

Business Objectives

• Definition: Specific goals businesses aim to achieve in a specified time frame.

• Purpose: Provides direction, aligns employee efforts towards common goals, and helps prioritize resources.

Importance of Measurable Objectives

• Ensures businesses can determine if goals have been met.

• Helps managers assess the success of strategies implemented to achieve objectives.

Specific Business Objectives

1. Profit

• Definition: Money remaining after expenses deducted from revenue.

• Components:

  • Revenue: Money from sales of goods/services.

  • Expenses: Costs for operating the business.

• Importance: Necessary for survival, growth, and improvement of a business.

• Strategies: Increase revenue, reduce expenses, or both.

2. Increase Market Share

• Definition: Proportion of sales a business has in relation to total industry sales (expressed as a percentage).

• Example: Woolworths holds approximately 37.4% market share in Australian supermarkets.

• Competitiveness Measure: An increasing market share indicates customer preference over competitors.

• Challenges: Smaller businesses can compare local sales to gauge market share.

3. Improve Efficiency

• Definition: Measure of resource utilization in production processes.

• Benefits: Using fewer resources can lower costs, improve profit margins, and expedite market delivery.

• Outcome: Efficiency gains may allow for competitive pricing or increased profits.

4. Improve Effectiveness

• Definition: Ability to achieve objectives as planned.

• Outcome: Focus on producing high-quality products, leading to increased customer satisfaction and loyalty.

• Management Strategy: Implement strategies to enhance effectiveness and meet objectives.

5. Fulfill a Market Need

• Definition: Addressing a gap or problem in the market to meet customer needs.

• Advantages: Attract customers by providing needed products/services.

• Market Research: Helps identify needs and gaps.

• Example: Tesla identified a market need for environmentally friendly vehicles, leading to a 40% increase in sales from 2021 to 2022.

6. Fulfill a Social Need

• Definition: Addressing social issues through business practices.

• Corporate Social Responsibility: Companies may aim to support social causes.

• Example: "Thank You" helps provide clean water and food hygiene, raising $17.5 million since 2008.

7. Meet Shareholder Expectations

• Definition: Focusing on delivering returns on investment to shareholders.

• Components:

  • Dividends: Share of profits distributed to shareholders.

  • Capital Gains: Increase in share value reflecting business performance.

• Management Focus: Strategies aimed at enhancing shareholder returns based on performance.

Conclusion

• Recap: Business objectives guide organizations in achieving specific goals such as profit generation, market share growth, efficiency and effectiveness improvements, meeting needs, and ensuring shareholder satisfaction.