What Are Businesses Objectives?

Objectives?
Objectivesareatthecentreofeverythingabusiness
does
Thereare3objectivesthatarecommonlyassociated
withallorganisations:

Growth
Survival

Profit
Profit

BusinessStudiesOnline:Slide1

Survival
Survival
Mainlyanobjectivewhenthebusinessisthreatened
Thiscanoccurin3scenarios:
Theearlystagesofthebusiness
Whentradingisdifficult
Whenthereisathreatoftakeover

Thisobjectiveisdesignedtomakestaffthinkwhether
theiractionsareputtingthebusinessindanger
Beawarethatnotallorganisationslookforlongterm
survival!

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Growth
Growth
Someseethisasnecessarytosurvive
Othersbelievethatbigisbeautiful
Manymanagerswillreceivemoremoneyifthe
businessisbigger
Therearedangersofbecomingtoobigi.e.staffmay
feellikeasmallcoginabigmachine
Additionallysomefirmsgrowtooquickly,e.g.:

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Firms With Growth Objectives

Objectives
WorldsFastestGrowingCompanies(10Years)
Rank

Company

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16

CampbellSoup
MicronTechnology
EMC
CiscoSystems
Tellabs
AveryDennison
DellComputer
Oracle
SCISystems
AppliedMaterials
CharlesSchwab
BestBuy
Microsoft
Amgen
ADCTelecommunications
MerrillLynch

500Revenues
Rank
287
248
216
107
479
428
48
184
230
196
260
156
79
455
486
25

1990 2000%Annual
GrowthinEPS
71.5
69.6
59.3
59.1
52.0
49.8
49.5
47.7
47.5
44.0
43.7
39.7
38.6
36.7
35.5
35.4

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Profit
Profit
Mostorganisationsseektomakeaprofit,unlessof
coursetheyarenonprofitmaking(ieleisurecentres)
Thereare2typesofprofitobjectives:
Profitmaximisation
Herethefirmwilltrytomakethemaximumamountofprofit

Satisficing
Mostfirmswillaimtomakeasatisfactorylevelofprofit

Businessesneedtomakeaprofitsothat:
thereissufficientmoneyavailabletokeepthebusiness
growing
moneyisavailabletomakethebusinessgrow
ownersarerewardedfortherisksthattheytake

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Other Objectives
Objectives
Ratherthanadoptthemain3objectives,somefirms
willadoptothers
Theseinclude:
Tooperateintheinterestsoftheconsumer
i.e.publicsector

Revenuemaximisation
i.e.charityshops

Tooperateinasociallyresponsibleway
Tomaintainawayoflife
appliestosmallbusinesses,whoaremoreconcernedwiththeir
businessasalifestyle.
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Setting Objectives
Objectives
Afirmmustbecarefulwhensettingobjectivesto
ensurethattheycanbemet.Itisgoodpracticefora
firmtosetSMARTobjectives:

Specific
setoutclearlywhatistryingtobeachieved

Measurable
sotheyknowwhenithasbeenachieved

Agreed
mustinvolveeveryone

Realistic
otherwisetheywillbeignored!

Timespecific
atimespantoachievethemwithin
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Objectives Over Time

Time
Statementssuchas:
ourobjectiveistobecomemarketleaderwithinthenext5
years
wontsucceedunlessitisbrokendownintosmallertime
periods
Thisisbecausemostpeopleleavethingsuntilthelast
minute
youwillknowthisfromexperience!

Butyoucantbecomemarketleader
atthelastminute!
Assuchfirmswillusuallyset
objectivesforthe:
Shortterm
Mediumterm
Longterm
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Communicating Objectives
Objectives
Firmscannotmakeonestatementabouttheir
objectives,andexpectworkerstounderstandit
Objectivesmustbecommunicatedtheirobjectives
Takethefollowingexample:
COMPANY
OBJECTIVE
Increaseprofit PRODUCTION
by30%
DIRECTOR
Increase
productionby
10%thisyear

PRODUCTION
SUPERVISOR
Produceanextra
11,000unitsper
month

TEAM
LEADERS
Produceextra
500unitsper
day

SHIFT
WORKER
Produceextra
20unitsper
hour
BusinessStudiesOnline:Slide9

Mission Statements
Statements
Manybusinessescommunicatetheirobjectivesinthe
formofamissionstatement
Thisissimplyawrittendescriptionofthegoalsofthe
business
Itiscommunicatedtostakeholdersusing:
Noticeboards,
Websites
AnnualReports

BusinessStudiesOnline:Slide10

An Example Mission Statement

Statement
McDonald'svisionistobetheUK'sbest
quickservicerestaurantexperience.This
willbeachievedthroughfivestrategies:
Development,OurPeople,Restaurant
Excellence,OperatingStructure,andThe
Brand.

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Objectives & Stakeholders

Stakeholders
Stakeholder

PossibleObjective

Influence

SingleOwner

Survival,Profit,Independence

Limitedexternally

Survival,Profit,Growth

Limitedexternally

Shareholder

Dividends,GoodPerformance

Limitedunlessholding
manyshares

Employees

JobSecurity,JobSatisfaction,
GoodPay,CareerOpportunities

Onlythroughtrade
unions

Satisfactionofneeds/wants

Throughthelawand
pressuregroups

Supplier

IncreasedSales

Varies

Creditor

PromptPayment

Varies

MaintainQualityofLife

Throughthelawand
pressuregroups

Partner

Customer

Community

Government FavourableEconomicConditions

Verypowerful
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Conflicts Of Objectives
Objectives
Conflictscanoccurin2ways:
Theobjectivesofstakeholderscanconflict
Shareholderswantgooddividendswhichrequireshighprofits
Workerswanthighwages,increasingcostsandlowerprofits

Theobjectivesofthebusinesscanconflict
shorttermobjectivesmayconflictwithlongtermobjectives
shorttermobjectivemaywellbesurvival
Thismaymeanthatrisksarenottaken

Longtermobjectivemaybegrowth
Thiswillrequireriskstobetaken!

Conflictscanbeovercomeifthebusinessisadaptable
Theymayneedtochangetheirobjectivesastheir
circumstanceschange
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From Objectives to Strategy

Strategy
Oncetheobjectiveshavebeendecided,abusiness
mustbegintoplanhowtheywillbeachieved
Inordertodothistheywill:
examinewherethebusinessisatpresent
Thiswillinvolvelookattheinternalandexternalconstraintsofthe
business

decideuponthebestroutetoachievingtheirobjectives
Thisinvolvesdrawingupastrategy,whichcantakeanumberof
forms

BusinessStudiesOnline:Slide14

The Role Of The Strategy

Strategy
STRATEGY

Abusinessstrategyisessentially
themapofhowthebusiness
cangetfromwhereitistodayto
whereitwantstobetomorrow
Wearehere

Themapis
our
STRATEGY
STRATEGY

Ourobjective
istobehere

BusinessStudiesOnline:Slide15

SWOT Analysis
Analysis
Beforeastrategycanbedrawnupabusinessmust
assessitscurrentposition.Thisisoftendoneusing
SWOTanalysis.
SWOTisanacronymthatstandsfor:
S trengths
Weaknesses
W
O pportunities
T hreats

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Carrying Out A SWOT Analysis

Analysis
ASWOTanalysisisusuallysetoutasfollows:

STRENGTHS

WEAKNESSES

Thislooksatwhatthe
businesshasbeengood
atinthepast

Thislooksatwhatthe
businesshasbeenpoorat
inthepast

OPPORTUNITIES
Thislooksatwhatthe
businesscoulddowellin
thefuture

THREATS

PAST

FUTURE

Thislooksatthepossible
problemsthebusiness
mayfaceinthefuture

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Types of Strategy
Strategy
Strategiescantakeanumberofforms:
Operationalstrategies
methodsofimprovingtheefficiencyofthe
objectives

Genericstrategies
strategiesthataffectthewholebusiness,e.g.a
decisiontostopproducingaproduct

Corporatestrategies
aimedatthelongtermpositione.g.plansto
doubleinsizeinthenext10years

Globalstrategies
strategiesthatmayinvolveoverseasexpansion

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