1.5.3 Business Objectives

Question 1

why do businesses set objectives?

Answer 1

• Common sense of purpose
• Motivate employees
• Create rewards systems
• Measure and review performance
• Inform decisions to improve performance

Question 2

What are possible business objectives?

Answer 2

• Survival –> more of an aim
• Profit maximisation –> more of an aim

Other objectives:
- Sales Maximisation

      - Market Share 
      - Cost Efficiency 
      - Employee Welfare 
      - Customer Satisfaction 
      - Social Objectives

Question 3

What is Sales Maximisation?

Answer 3

Sales maximisation is to achieve the highest achievable amount of sales either by volume or by value

Note: Sales volume is the amount of sales expressed as a number of units sold
Sales value is the amount of sales expressed as the total sum of money spent by consumers

Question 4

What is Market Share?

Answer 4

The proportion of total market sales that a business has

Question 5

Market Share Equation

Answer 5

Market Share = Total sales of the business / Total sales of the market x 100

Question 6

What is Cost Efficiency?

Answer 6

To control costs so that the maximum value of outputs is achievable with the lowest value of inputs.

Question 7

What is Employee Welfare?

Answer 7

To look after the economic and physical well-being of the work-force

Question 8

What is Customer Satisfaction?

Answer 8

To ensure that goods and services meet the needs and expectations of the customer

Question 9

What is Social?

Answer 9

Social is to behave in a way which benefits society?

Note: A business may focus on social objectives as a way of maximising profits, as customers may
be more likely to buy from a business that they know is socially responsible.
Some businesses are set up with an overall aim of being to improve a social problem - these
businesses are known as a social enterprise.