Setting Business Aims and Objectives Flashcards
Define the term sale.
The number of products sold by a business.
What is an objectives?
Short term goals made to achieve a businesses overall/ long term goal (aim).
What is an aim?
A general/ long term goal for a business.
What are the purposes of setting objectives?
1) To guide decisions.
2) To provide a measurable target.
3) Objectives can assists in raising finance. Allows potential investors to understand what direction the business is going in before they lend finances.
4) Co-ordination. Having objectives can help to ensure that all employees in a business are taking decisions with the same goal in mind.
What factors will influence the type of objectives a business has?
1) The businesses aims.
2) The type of business e.g. a not-for-profit may not have the object
Give examples of business aims.
1) Survival. This is a common aim for businesses that are newly established, as 60% of new UK businesses fail within the first 5 years.
2) Growth. This is the aim of many businesses that wish to increase their sales. Growth can be domestic and can make a business more dominant in its market.
3) Profit maximisation. This occurs when a business aims to make the highest possible profits from its activities.
Give examples of business objectives.
1) Market share. This measures the percentage of sales in a particular market recorded by a business.
2) Customer satisfaction. This measures whether the products supplied by a business match or exceed the expectations of customers.
3) Shareholder value. This is the financial benefits received by a company’s shareholders which can take the form of rising share prices and dividends paid.
4) Social objectives. These are the goals of a businesses intended to help society in general or specific groups of people.
What are dividends?
The financial rewards paid out by a company to its shareholders each year.
How might a business’s objective as it grows?
1) New businesses may have the objective of survival.
2) Established businesses may have the objective of growth.
3) Large businesses may have the objective to become a monopoly.
