Business Objectives

Question 1

Features of business activity

Answer 1

1- Output is produced (g/s)
2- G/S consumed by customers
3- Resources used
4- No. of bus. functions carried out- production, marketing, finance and HR
5- Affected by external factors (legislature, natural disasters, competitors, economic climate, trends)
6- Aim to make a profit (unless social and public enterprise)

Question 2

Imp. of clear objectives

Answer 2

1- Serve as a measure of success, if targets are met, indicates bus. is doing well
2- Motivates employees, have something definite to work towards
3- Motivates owners- w/o obj. owners can let bus. drift
4- Help decide which direction bus. is headed and what steps are needed to get there

Question 3

Financial objectives

Answer 3

1- Profit- for priv. sector, some want profit max,
2- Survival- especially important when bus first starts (vulnerable)/trading conditions difficult
3- Sales growth- lower costs, larger market share, higher public profile, higher profits, job security
4- Increased market share- higher profile, brand loyalty, dominate market, charge higher prices, launching new products is easier
5- Financial security- enough to satisfy needs of owners, do not want to take on additional responsibility of expansion

Question 4

Non-financial objectives

Answer 4

1- Social objectives- imp in public sector that doesn’t aim to make profit; linked to quality of service and reducing costs. In priv sect- improving social responsibility
2- Personal satisfaction- Happier in own environment that working for employer, enjoy taking risk and seeing bus. succeed, develop personal hobbies into business, satisfying to see business idea grow
3- Challenge- many challenges on a day to day basis, this motivates owners. May set new challenges for themselves
4- Independence and control- Do not want to be told what to do, independence drives people, want to take control over their futures

Question 5

Why do objectives change?

Answer 5

1- Market conditions - if trading is difficult, profit-seeking bus will decide survival is more imp.
2- Technology- Introducing automation will require higher sales to lower costs, or increase market share after investing in online selling tech
3- Performance- Depending on profitability, if sales have been increased, prices were reduced so main objective is profit
4- Legislation- Environmental, employment or consumer legislation, for eg, might have to make reducing pollution an objective
5- Internal reasons- change in mgmt or ownership

Question 6

Objectives should be

Answer 6

Specific
Measurable
Achievable
Realistic
Time specific