Business Objective

Business Objective

1. Definition

   • Give the business a clearly defined target
   • Motivate employee
   • enable business to measure the progress towards its stated aims

2. Most Effective Business Objective

   • Specific
     • Aimed at what business does
   • Measurable
     • Business can put a value to the objective
   • Attainable
     • Agreed by all those concerned in trying to achieve the objective
   • Realistic
     • Challenging, but also able to be achieved by the resources available
   • Time speciifc
     • Have time limit of when the objective should be achieved

3. Main Objective

   • Survival
     • For small business
   • Profit Maximization
     • Try to make most profit possible
   • Profit satisfying
     • Try to make enough profit to keep owner comfortable
   • Sales Growth
     • Tries to make as many sales as possible

4. Business conflict

   • Growth Vs Profit
     • Achieve higher sales in short term by cutting price
   • Short-term vs Long-term
     • Accept lower cash flow short-term rather than invest heavily in product or plant and equipment

5. Alternative aims & Objectives

   • Ethical and socially responsible Objective
     • Based on their beliefs on how one should treat the environment and people who are less fortunate
   • Public sector corporation
     • Generate profit but provide a service to public
     • Need to meet the needs of the less well off in society or help to improve the ability of the economies function
   • Public Sector Organization
     • Ensure the business they are monitoring comply with the laws laid down
   • Health care and education establishment
     • Provide a service
       • e.g. : enhancement of their pupil through education
   • Charities & voluntary Organization
     • Led by the belief they stand for

6. Changing Objective

   • Business may achieve the objective and will need to move onto another one
   • Competitive environment may change
     • Launch new product from competitors
   • Technology might change product design
     • Sales and production targets might needs to change

7. Business entity in Malaysia

   • Sole Propriety- Own by one person
     • Main Advantages
       • Total control of the business by the owner
       • Cheap and easy to start up
       • Keep all the profit
       • Business affairs are private
     • Main Disadvantages
       • Can be difficult to enjoy economies of scale
       • Difficult to raise finance
       • Unlimited liability
       • problem of continuity if the sole trader retires or dies
   • Partnership- 2 or more owner but not exceeding 20 persons
     • Advantages
       • Spreads the risk across more people
       • Partner may bring money and resources to the business
       • Partner may bring other skills and ideas to the business, complementing the work already done by the original partner
       • Increased credibility with potential customers and suppliers
     • Main disadvantages
       • Less control of the business for the individual
       • Have to share the profits
       • Disputes over workload
   • Limited Liability Partnership
     • Disadvantages
       • Costly and complicated to set up as a plc
       • Certain financial information must be made available for everyone, competitors and customers included
       • Shareholders in public companies expect a steady stream of income from dividends
       • Threat of takeover
   • Franchies -where a business sells a sole proprietor the right to set up a business using their name
     • Advantages
       • being a franchisor
         • Large companies see it as a means of rapid expansion with the franchisee providing most of the finance
         • If the franchise model works, then there are large profits to made
           • selling franchises
           • royalty payments
           • selling raw materials and equipment
       • setting up as a franchisee
         • given support by the franchiser
         • may benefit from national advertising and being part of a well-known organization
         • Less investment is required at the start-up stage
         • allows people to start and run their own business with less risk
     • Disadvantages
       • The cost to buy franchise can be very expensive
       • Have to pay a percentage of your revenue to the business you have bought the franchiser from
       • Have to follow the franchise model, so less flexible
   • Cooperative- a number of individuals or businesses work together to achieve a common purpose
     • Main types of co- operatives
       • Retail co-operatives
       • Marketing or trader co-operatives
       • Worker co-operatives
     • Problems
       • The system of one member one vote in some societies means a long, drawn out decision-making process
       • difficult to raise finance
       • creating unrest and disharmony
       • not lead to profits in the long run
     • Stakeholders- any individual or organization that is affected by the activities of a business
       • Shareholders – they will be interested in their dividends and capital growth of their shares
       • Management and employees
       • Customers and suppliers
       • Banks and other financial organizations lending money to the business
       • Government
       • Trade Unions
       • Pressure Groups