Objectives

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