Business objectives – the aims or targets that a business works towards

Benefit of Business objectives

 Give managers and workers clear targets to work towards >> help to motivate people
 Making decisions will based on business objectives >> managers can compare business
performance with business objectives whether it achieve the business aims or not
 Clear and measurable targets can help unite the whole business towards the same goals

Objectives of Private sector business

1. Survival  When economy is in recession / when the business set up recently >> more
concerned with survival due to new competitors make the business less secure >> managers
need to lower the price >> profit for each items sold (-)
2. Profit  When a business is owned by private sector that aims for making profit.
Profit is needed due to
 To pay a return to owner of the business which they invested risks and capital
 To provide finance further investment
 To expand the business
 To continue the business in the future period

( without profit >> business close down)

3. Returns of shareholders  shareholders own limited company

Returns to shareholders increase due to:
 Increaseing profit >> share of profit (+) >> Dividends (+)
 Increasing share price >> Profits (+) in the future >> Good chance of growth
4. Growth  owners & managers of the business aim for growth in the size of the business due to:
 make jobs more secure
 increase salaries and status
 help to gain opportunities such as spreading the risks of the business by moving into
new products and new markets
 obtain higher market share
 obtain cost advantages called economies of scale
5. Market share  the percentage of total market sales held by
one brand/ business
Increase market share gives a business:
 Good publicity
 Influences on suppliers(+) >> suppliers keen to sell larger business rather than others in
the industry
 Influences on customers(+) such as setting prices
6. Service to the community  social enterprises operated by private individuals that set 3 aims :
 Social  to provide jobs and support for disadvantaged groups in society
 Environmental  to protect the environment
 Financial  to make a profit to invest back into the social enterprise to expand the
social work that it performs
Why objectives change?

1) Owner’s wants such as higher profit

2) Owner wants higher market share
3) Owner can survive in the short run

Objectives of stakeholders’ group

1. Internal
1) Owners
Features :
 Risk takers
 Put capital to set up and expand the business
 Businesses must attract enough customers to take a share of profit

Objectives :

 Share of profit >> gain rate of return on the money put into the business (Return
on capital)
 Growth >> value of business’es investment (+) (Profits)
2) Workers
Features :
 Employed by the business as part-time/full-time
 Training is required to become skillful workers
 Have to follow manager’s instructions
 Can be faced reduandant

Objectives :

 Regular payment (Income)

 Provide motivation/job satisfaction >> labour productivity(+) (Satisfying work)
 Contract of employment
 Job security
3) Managers
Features :
 Not only employees but also control the work of other workers
 Make important decisions  if it is successful, lead the business to expand and
if not, business could fail

Objectives :

 High salaries due to doing the important tasks (Salaries)

 Job security
 Business growth >> managers can gain higher status and power(Status) &
(Control)
 2. External
1) Customers
Features :
 Important for every business due to business making losses & fail if it don’t have
enough customers
 To avoid it, business do market research

Objectives :

 Safe and reliable products

 Value for money with well-designed products of good quality
 Reliability of service and maintenance
2) Government
Featuress :
 responsible for the economy of the country
 passes laws to protect workers and consumers

Objectives :

 Business successful >> employ workers >> taxes(+) / output (+)

 All firm’s to follow the rules and laws which affect business activity
3) Banks
Features :
 Provide finance for business’s operations

Objectives :

 Business to be able to pay interest and repay capital lent

4) The whole community
Features :
 Can be greatly affected by business activity such as harm environment by
pollution
 Can be beneficial when business creates job opportunities >> income (+) >>
living standard

Objectives :

 Jobs for working population (Jobs)

 Production that doesn’t damage environment (Clean environment)
 Safe products which are socially responsible (Safe products)

Objectives of public sector business

1. Financial  meet profit targets set by government and reinvested back in the business
2. Service  meet quality of service targets set by government
3. Social  protect/create employment in certain areas