An objective is a target that is set for a business to achieve
Objectives are important because:
- it helps with decision making and with establising priorities.
- it helps investors to understand the direction in which the business is heading, this might mean they are more willing to agree to certain decisions
- ir provides a target so that everyone can compare the actual results with the planned results to decide how successful the business has been
- it can motivate everyone connected with the business because they know what they are trying to do and how they can measure their success
Surviving is the main and most important short-term aim for all new businesses, as starting a business is risky and presents many challenges.
In order to survive but to get the business's name known, it may be neccessary to charge lower prices and make lower profits.
The vast majority of businesses will aim to make a profit. At first though it is likely that the entrepreneur may accept lower profits in the short run, in the long run though making a decent profit is essential in order to stay in business.
Profitable firms are an important source of wealth creation for the economy.
Many firms will aim to grow, but growth may mean different things. For example, it may mean increasing the number of employees, increasing the number of products sold, or increasing income from sales. As businesses become more establishged the possibility of them expanding is made more likely as they have the money to do so.
When a business first starts up it has 0 market share, so one of the first aims is to capturea a part of the market and establish itself. It can then aim tp increase it. The market share measures the sales of one product or business as a percentage of the total market sales.
Envrionmental sustainability is about minmising the impact of the businesses on the environment. As consumers become more concerned about issues such as climate change, they're more likely to buy from businesses that reduce their effect on the environment. They might set targets to limit their energy use, to limit their carbon foortprint, to achieve certain recycling targets, tp reduce wastage or reuse more of theur supplies.
The ethics of a decision refer to what is regarded as right or wrong. Unethical businesses may be criticised by the media and lose customers. By being ethical a business may benefit:
- by getting favourable media coverage
- by using the ethical message in its marketing
- by attracting customers, investors and employees
Customer satisfaction measures how happy consumers are with the products and services provided by the business. Businesses may set targets centring on achieving a particular level of customer satisfaction by providing a better service or a wider range of products than their competitors.
Objectives Help Businesses to Achieve Their Aims
1. Once a firm has established its aims, it needs to set business objectives.
2. There are different types of objectives. Can be related to - surival, profit, growth, market share, environmental sustainablity, being ethical and customer satisfaction.
3. Objectives more specific than aims - measurable steps on way to aim.
4. Once an objective has been set they act as clear targets for firms to work towards.
5. They cn then be used later to measure whether a firm has been successful or not