Business Objectives

Question 1

What are examples of entrepreneurial motives?

Answer 1

• The prospect of high profit
• To have independence from bosses
• To achieve a social or ethical goal
• To be able to manage their time and work hours

Question 2

What are the three types of goals within a business and how are they described?

Answer 2

Mission Statement - the overall purpose of the business
Aims - general statements about what the business intends to achieve in the long term
Objectives - quantifiable targets that can be achieved in the short term, e.g. 2-5 years.

Question 3

What are other possible objectives for a business?

Answer 3

• Employee welfare (good for productivity)
• Customer satisfaction (to build customer loyalty and repeat business)
• Social objectives

Question 4

Why do businesses set objectives?

Answer 4

• To provide employees with a common sense of purpose
• To motivate employees
• To encourage decision making that is in line with the objectives.

Question 5

Define PROFIT SATISFICING

Answer 5

Profit satisficing is making just enough profit so to be satisfied with the amount made.
The business continues to operate and the owner has enough money to have a lifestyle they want.
Used more by small businesses and entrepreneurs.

Question 6

Define PROFIT MAXIMISATION

Answer 6

Profit maximisation is maximising the amount of profit made.
This is due to the business having shareholders who expect a dividend every 6 months/every year.
Usually used by larger businesses or public limited companies.

Question 7

Define SHORT TERMISM

Answer 7

Short termism is the concentration on short term objectives at the expense of long term security.

Question 8

Define STAKEHOLDERS

Answer 8

An individual or organisation who has a vested interest in the activities and decision making of a business

Question 9

Define COST EFFICIENCY

Answer 9

Cost efficiency measures the effectiveness of a business’ costs - are they getting enough out for what they put in?

Question 10

Define CUSTOMER SATISFACTION

Answer 10

Customer satisfaction is the meeting of consumer expectations through the provision of a good or service.

Question 11

Define EMPLOYEE WELFARE

Answer 11

Employee welfare is an objective to look after the economic and personal well being of the workforce.