6 Objectives

PM 05/09/00 H BM - BUSINESS ACTIVITY 1

BUSINESS OBJECTIVES

• It is important for a business to– have well defined objectives (goals)– be clear about what it wants to

achieve

• Business objectives will be– determined by its stakeholders– used to determine success


MISSION STATEMENTS

– immediate and long term objectives– express objectives in ‘qualitative’ terms– often focus on the needs of customers– identifying specific service to be

provided– issued to customers, employees – displayed in reception areas


• in the long run all businesses must make profit to survive

• firms may sacrifice short term profit maximisation for long term profits

• small firms may not wish to maximising profit if it means– increasing workforce/longer hours– VAT threshold

MAXIMISING PROFIT


GROWTH• Growth may mean

– survival – domination of market– economies of scale– diversification– reduced business risk

• Lack of growth may mean – loss of competitiveness– decline in demand– closure


SURVIVAL• There are 3 main times when a business

may consider survival to be one of its main objectives:– early stages of trading

• lack of experience• lack of resources• competition• unforeseen problems• limited recognition

– during a recession– threat of takeover


REPUTATION

• Image and social/corporate responsibility has become increasingly important in business because of

– legislation which favours consumers– changes in social attitudes– competitive pressure


MAXIMISING SALES

• sales revenue maximisation is NOT the same as profit maximisation

• ownership and control are separate

• salaries linked to annual turnover


SOCIAL RESPONSIBILITY

• Behaving in a manner that takes all stakeholders into consideration:

• Staff welfare

• Prompt payment of suppliers

• Ethical trading

• Consideration of local community


Managerial Objectives

• ownership and control are separate• management able to take control• management aims may be

– maximise personal salary– maximise their departmental budgets– improve their status and recognition– maximise no of employees in their charge– maximise their leisure time– delegate as much work as possible– maximise fringe benefits


Provision of a Service• May be main objective of

– public sector body – voluntary sector organisation


What determines business objectives?

• size and status• age of business• sector - public, private or voluntary• whether long-term or short-term

objectives • external pressures• internal pressures• risk• culture

Economy & Finance

6 Objectives