Summary
Summary Business Objectives
- Institution
- PEARSON (PEARSON)
Defines objectives, aims and strategy, and describes some long and short term objectives of businesses.
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Theme 1 Topic 2Business Objectives
Key Definitions
Objectives – a specific and measurable target for the future
Aim – a vague statement
Strategy – the plan used to achieve the business objectives
Short versus long term objectives
Profit maximisation is the most common objective among businesses in order to provide the capital to reinvest
in expansion and to reward investors with dividends.
Profit is where revenue is greater than business costs. Most businesses want to make a maximum amount of
this.
Difference between aims and objectives
Aim – a general goal e.g. “to be successful”
Objective – specific and measurable target e.g. “to achieve a market share of 38% by January 2017”
Objectives needs to be SMART:
Specific
Measurable
Achievable
Realistic
Timebound
Business Objectives
Profit maximisation To achieve the maximum levels of profit possible
Survival To ensure the company will continue to trade in the
future perhaps by breaking even or ensuring
adequate cash flow
Sales maximisation To achieve the highest possible levels of sales
revenue. This may be a target when senior
manager’s salaries are linked to sales growth
Market share % of total sales achieved by a business in
comparison to the size of the market
Cost efficiency Minimising costs to remain competitive e.g. Primark
Employee welfare Trying to keep employees happy at all times
Customer satisfaction Keeping customers happy
Social objectives To help society in some way such as raising funds for
charity or using recycled materials to minimise harm
to the environment.
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