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Business Objectives

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22 views3 pages

Business Objectives

Uploaded by

mohindeev
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Business objectives

Business objectives are the aims and targets that a business works towards to help it run
successfully. Although the setting of these objectives does not always guarantee the business success, it has
its benefits.

 Setting objectives increases motivation as employees and managers now have clear targets to work
towards.
 Decision making will be easier and less time consuming as there are set targets to base decisions on. i.e.,
decisions will be taken in order to achieve business objectives.
 Setting objectives reduces conflicts and helps unite the business towards reaching the same goal.
 Managers can compare the business’ performance to its objectives and make any changes in its
activities if required.

Objectives vary with different businesses due to size, sector and many other factors. However, many
business in the private sector aim to achieve the following objectives.

 Survival: new or small firms usually have survival as a primary objective. Firms in a highly
competitive market will also be more concerned with survival rather than any other objective. To
achieve this, firms could decide to lower prices, which would mean forsaking other objectives such as
profit maximization.
 Profit: this is the income of a business from its activities after deducting total costs. Private sector
firms usually have profit making as a primary objective. This is because profits are required for further
investment into the business as well as for the payment of return to the shareholders/owners of the
business.
 Growth: once a business has passed its survival stage it will aim for growth and expansion. This is
usually measured by value of sales or output. Aiming for business growth can be very beneficial. A
larger business can ensure greater job security and salaries for employees. The business can also
benefit from higher market share and economies of scale.
 Market share: this can be defined as the proportion of total market sales achieved by one business.
Increased market share can bring about many benefits to the business such as increased customer loyalty,
setting up of brand image, etc. This can be calculated by the followings:

 Service to the society: some operations in the private sectors such as social enterprises do not aim for
profits and prefer to set more economical objectives. They aim to better the society by providing social,
environmental and financial aid. They help those in need, the underprivileged, the unemployed, the
economy and the government.

Why business objectives could change


It is most unusual for a business to have the same objective forever! Here are some examples of situations in
which a business might change its objective.
1 A business set up recently has survived for three years and the owner now aims to work towards higher
profit.
2 A business has achieved higher market share and now has the objective of earning higher returns for
shareholders.
3 A profit-making business operates in a country facing a serious economic recession so now has the short-
term objective of survival.
The main internal and external stakeholder groups and their objectives
A stakeholder is any person or group with a direct interest in the performance and activities of a business.
Conflicts of Objectives
As all stakeholders have their own aims they would like to achieve, it is natural that conflicts of stakeholders’
interests could occur. Therefore, if a business tries to satisfy the objectives of one stakeholder, it might mean
that another stakeholders’ objectives could go unfulfilled.

For example, workers will aim towards earning higher salaries. Shareholders might not want this to happen
as paying higher salaries could mean that less profit will be left over for payment of return to the
shareholders.

Similarly, the business might want to grow by expanding operations to build new factories. But this might
conflict with the community’s want for clean and pollution-free localities.

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