Objectives
Mission Statement – These set out the reasons why a business exists and what it is trying to achieve.
Aims and Objectives:
- Aims are determined by owners and managers
- They will change over time as the business grows and the business environment changes
Corporate Aims & Objectives
- Corporate aims – The long-term intentions of a business
- Corporate objectives: Targets that must be achieved in order to realise the aims of the business.
- Corporate aims and corporate objectives are used to help the business achieve what is set out in the mission statement
SMART
- Specific
- Measurable
- Agreed
- Realistic
- Timed
Short Term versus Long Term objectives
The choice of short term or long-term objectives depends on:
- Financial position
- Market position
- Economic Conditions
- Government Policy
- Bad publicity & Social change
In the short term a business may aim to survive but in the longer term they may aim to make a profit
Common Objectives
The most common objectives are concerned with:
- Profit -This is the number one objective for most firms in the private sector.Profit = Total revenue – total costs.Profits can be used to reward workers and reinvest in the business so it can grow
- Growth – Firms may set growth or increasing their market share as an objective. If a firm wants to grow it will see a decrease in profits as it will have to incur costs to do so
- Social Considerations
- Employee Welfare
Other objectives
- Social considerations – these are objectives which influence society or a business’s local community
- Employee welfare – some businesses set objectives for their workers welfare
Conflicting Objectives
- Objectives may often be in conflict:
- Growth vs. Profit– To grow, a business will need to spend more money which will reduce profit
- Profit vs. Employee Welfare– It is often expensive for a business to ensure that its workers are well looked after
Stakeholder Objectives
Stakeholders are individuals or groups who are affected by the actions of the business
Stakeholders include:
- Employees
- Local community
- Customers
- Suppliers
- Shareholders Society
Stakeholder Interests
Stakeholders often have conflicting interests:
- Shareholders key aim is to make a profit this may conflict with employees who want a stable job and training
- Shareholder interests may also conflict with suppliers as to increase profitability prices to suppliers would have to decrease
- Shareholders and the local community could be in conflict – it is not necessarily profitable to help the local community
Summary
- Mission statements set out an organisations purpose and key activities
- Corporate aims are long term goals of a business
- Corporate objectives are the steps taken to meet the aims
- Common aims include profit and growth
- Objectives can be short or long term
- If objectives are short vs. Long term it depends on the firm’s financial and market position, the economy and government policy
- Objectives often conflict with one another e.g. Profit and growth
- Stakeholders are any groups who have an interest in a business
- Shareholders are individuals who own the business, their key objective is profit and this often conflicts with the objectives of other stakeholders
- Organisational Culture is the set of values, attitudes and beliefs in an organisation