1.5.3 Business Objectives ****** Flashcards
Define business objective
A goal or aim that a business wants to achieve
What are SMART targets?
Specific Measurable Achievable Realistic Timely
What is ‘survival’ as a business objective?
- short term
- aim to reach a sustainable level of sales that allows the business to reach break-even point
What is ‘profit maximisation’ as a business objective?
- helps to recoup any R&D costs
- lots of supermarket items are getting smaller (shrinkflation)
- needed in order to maintain high levels of product development and innovation
What are the 6 other business objectives?
- Sales maximisation
- Market share
- Cost efficiency
- Employee welfare
- Customer satisfaction
- Social objectives
Why is sales maximisation important?
It’s an important performance indicator and can be used by entrepreneurs to win a larger market share
Why is market share important and when might it be used as an objective?
It’s important for investors to judge how a business is doing against competitors. May be an objective in competitive markets where consumers switch between suppliers.
How can cost efficiency be achieved?
- paying minimum wage to unskilled workers
- strong branding to increase perceived value
- lower quality and price of the product
Why is employee welfare important?
- satisfied employees are more loyal, hardworking, motivated which increases productivity
- enhanced public image makes it easier to recruit
What is customer satisfaction an an objective?
- reducing number of complaints
- identifying what the customer wants
- satisfied customers will tell others, word of mouth is a cheap way of marketing to improve sales.
What do social objectives involve?
Reducing impact on environment, fair wages in developing countries, helping society, compliance with laws.
