1.3 - Setting business aims and objectives

1.3 - Setting business aims and objectives

1. Keywords

   • Aim - A general goal of the business e.g. Apple's aims is a society without cash
   • Objective - A specific target set for a business to achieve e.g. Apple may want to introduce apple pay to all mobiles
   • Public sector organisations - Owned by the government
   • Private sector organisations - Owned by individuals

2. The purpose of setting objectives

   • Helps with making decisions and setting priorities
   • Helps investors evaluate the direction the business is going in
   • Provide targets so everyone can compare actual and planned results
   • Can act as a motivator

3. Survival is important for a new business or a business that needs to survive when people have less money

4. Earning a profit is a long-term objective of all businesses. without profit a business can close

5. Shareholder value

   • Shareholders employ managers to run the business with aim of making rewards. Profits are generated to pay dividends (a payment made on each share)
   • The better the business is run the more demand there will be for shares, shareholders can sell shares for greater value than paid (increase shareholder value)

6. Customer satisfaction and market share

   • Businesses can set objectives to reach a specific level of customer satisfaction
   • Satisfied customers mean more people buying products
   • Market share is the measure of sales of a product or business as a percentage of the total market sales
     • • Sale of product x 100 total market share
   • Businesses set themselves a percentage of market share they hope to achieve. e.g. Aldi had increased market share by 2.2% in 3 years
     • Market share =

7. Growth

   • When a business wants to open more shops, sell more products or increase revenue. Growth can be national or international
     • Demand and costs c=need to be looked at carefully to ensure growth can succeed
       • E.g. Subway has a growth target of 100,000 stores worldwide by 2030

8. Being Ethical

   • Ethics are what is regarded as right or wrong (morally) e.g. paying reasonable wages and respecting customers
     • Benefits to the business include positive media, drawbacks are increased costs
       • E.g. Starbucks uses recycled paper for cups and reduces water usage

9. Environmental and sustianability targets

   • Businesses can try to ensure their activities do not damage the environment e.g. Objectives could be to recycle or use renewable resources

10. Effective objectives

    • They should state what the target is, when it should be completed, who has to achieve it and how to do so
    • The must be achievable
      • People: The business will probably need staff
      • Money; They need to be able to afford certain resources and finances fort he target
      • Equipment: Must have the machinery and facilities needed

11. Not-for-profit organisations

    • private sector organisations mainly have profit as main objective but not for profit ones e.g. charities have other objectives e.g. to help a certain cause

12. Changing objectives - Often linked to the development of a business

    • At the start of a business, survival is the objective e.g. sell products to cover costs
      • As business gets bigger there will be other objectives e.g. profit

13. Using objectives to measure success

    • Actual performance can be compared to objective to see how far the buisiness has come the business can then review performance and make informed decisions