1.3 - Business Aims And Objectives Flashcards
What is an aim of a business?
A general goal of a business. For example, an aim could be to make a business more profitable, or to grow it.
What is an objective of a business?
A specific target set by a business that turns an aim into something that is easier to measure and assess progress. For example, the aim may be to grow, but the objective may be to grow sales by 25% within three years.
Why set objectives?
- It helps with decision making and establishing priorities
- Helps investors understand direction of the business
- Motivation and targets for employees
What is the priority of Survival in a business?
Surviving is essential for small businesses, when they are at a delicate stage in their lifespan, if a nations’ economy is doing badly, then a company may sacrifice profits and margins for the sake of surviving as people will have less to spend.
What is the priority of ‘Earning a profit’ in a business?
In most cases this will be a long-term objective. Profit occurs if the amount of money a product is sold for is more than the amount of money spent in providing it. It takes time to start making a profit, Ocado didn’t make profit for years before building it’s brand. If a profit cannot be made in the long-term, it will probably close
What is the priority of ‘Shareholder Value’?
Managers employed by shareholders to manage the business will aim to reward the shareholders by running the business well so that more people will want to buy the shares, and this increases demand for the shares and makes their price go up, so the shareholders now own something that is worth more than what they intially paid for it.
What is the priority of ‘Customer Satisfaction’?
Business set targets that focus on acheiving a particular level of Customer Satisfaction by providing a better service or a wider range of products than their competitors. If customers are satisfied, then it is more likely that they will want to buy their products.
What is the priority of ‘Market Share’?
Businesses may set themselves targets of how much of the market they would like to hold in the sector.
What is the priority of growth?
By what amount the owners and managers want the business to expand, this may be measured by how many stores they have opened, or how many products they have sold.
What is the priority of ‘being ethical’?
The ethics of a company may be how they treat their workers, and treating suppliers with respect etc. . Companies that are considered as unethical, may be criticised by the media and hence, lose customers.
What is the priority of ‘environmental and sustainability targets’?
Businesses may seek to carry out activities that are not harmful to the environment, and set limits to how much energy they use, or limit their carbon footprint etc. . This can help them gain eco-concerned customers
How can you make an effective objective?
S - Specific
M - Measurable
A - Attainable
R - Realistic
T - Time Bound
Why must objectives change?
For the a business’ first years, a primary goal would be survival, but this would change as the business progresses.
What is a ‘not-for-profit’ organisation?
These are organisations that aim to provide a free service for the public. An example of a public sector NFP would be an NHS hospital, an example of a private sector NFP would be a charity such as British Heart Foundation
