1.4: Business objectives

Question 1

Describe business objectives

Answer 1

A business objective is what a business wants
to achieve. The strategies that the business will use to get there
(what does the business need to do in order to achieve this aim?)

Question 2

Describe business objectives for businesses in the private, public and third sectors

Answer 2

Objective of the:
- Private sector is to make profits from their business operations.
- Public sector is to benefit the community. Deliver goods and services rather than to generate profit
- Third sector raise funds to invest in social, environmental, or cultural objectives. They do not make profit.

Question 3

Explain why certain business objectives would be pursued

Answer 3

Objectives give the business a target. Plans and strategies can then be made to achieve these targets. This can motivate the employees.

Question 4

Explain different business objectives
- Maximising profit
- Maximising sales

Answer 4

Maximising profit: generate as much profit as possible

Price is determined by:
- how much it cost to make the product
- What customers are willing to pay
- What competitors are charging
- The quality of the product

Maximising sales: Selling as many units of a product as possible or having the highest sales revenue as possible.

Sales maximisation –> growth
Sales maximisation –> increasing market share.

Question 5

Explain different business objectives
- Growth
- Survival

Answer 5

Growth: Larger company through opening new
sales outlets, launching new products, taking on
more staff or buying a competitor

Growth mean:
- survival
- domination of market

Survival: sales revenue = costs

When a business consider survival:
- Increase in competition
- Threat of takeover
- during a recession

Question 6

Describe the term mission statement and explain the benefits of a mission statement

Answer 6

Mission statement: outlines the main
intentions of the company

Benefits:
- shows immediate and long term objectives
- focus on customer needs
- improve the organisations image
- helps the organisation to create targets
- allows employees and customers to identify with the
organisations objectives