Aims and Objectives

Question 1

Whats an aim or an objective?

Answer 1

An aim or objective is a statement of what a business is trying to achieve over the next 12 months. For example, a business can set itself any of these targets:
survival
increased profit
growth
increasing market share

Question 2

Why is having an aim/objective useful?

Answer 2

Having an objective is useful because it helps staff to focus on shared aims. A business could instruct its staff to work towards increasing sales by 10% by the end of the year.

Question 3

Why do different businesses have different objectives?

Answer 3

Different organisations have different objectives. Some businesses are run to make as much profit as possible for owners. However, not all businesses aim to make profit. Voluntary organisations such as charities are more concerned with providing a service to others.

Question 4

What are SMART objectives?

Answer 4

Specific: clearly state what is to be achieved, eg increased profits.
Measurable: the desired outcome is a number value that can be measured, eg increase profits by 10%.
Agreed: all staff are involved in discussing and agreeing an aim.
Realistic: the target is possible given the market conditions and the staff and financial resources available.
Timed: the target will be met within a given period of time, eg 12 months.

Question 5

What is stakeholder consideration?

Answer 5

While owners have a major say in deciding the aims of a business, other interest groups called stakeholders are usually considered. Stakeholders are any group of people interested in the activities of the business - they could be managers, staff or customers. When owners sacrifice some profit to pay staff an annual bonus, this is an example of stakeholder consideration.

Question 6

Why do business objectives change?

Answer 6

The aim of a business can change over time. This can happen in response to internal factors, such as business growth, or in response to external factors, such as an economic recession.
A small start-up business may aim to survive in the first year. Once successful, the business then sets itself the objective of increasing profits or growing in size.
Alternatively, a profitable business that is hard hit by an economic recession may struggle to maintain the same level of output. Faced with declining sales, a business may change its objective from growth or making a profit, to simply surviving.