Business Objectives

• What are objectives?

  What businesses want to achieve in short and long term.
• Outline some objectives a business may have.

  Profit maximisation, survival, growth, increasing market share, social responsibility.
• What is profit maximisation?

  Trying to make as much profit as possible. This is not always possible along with other objectives. Satisfy owners/shareholders.
• How do you achieve profit maximisation?

  Increasing the difference between the selling price and the cost price.
• What is survival in business objectives?

  Can be objective at different points of life in organisation. This is when organisation wishes to continue providing goods/services in future. If not, have to fold/enter administration
• What are different points that a business may choose survival as an objective?

  Starting up, recession, competition.
• Explain why survival is an objective when starting up.

  Most new businesses will only have the aim to survive.
• Explain why survival is an objective during recession.

  Recession > value of GDP drops - limited materials to make more product. Sacrifice profit to survive recession.
• Explain why survival is an objective with competition.

  Where another organisation offers similar products and services.
• What is growth objective?

  Business becomes larger through opening more sales outlets, increasing market share, taking over competitor.
• How can growth be measured in business?

  - to increase profits

  - to increase sales

  - to have largest market share

  - to increase employees

  - to increase value of business
• What is increasing market share?

  Increasing customers/sales or aiming to attract more customers to buy from them. Market share > firms percentage of all sales in market.
• What is social responsibility?

  Organisation acts in a deliberate way that avoids harm to the local community/environment.
• What are some examples of social responsibility?

  - secure employment for staff

  - supplier's staff are fairly treate

  - reduce pollution

  - recycle waste

  - contribution to local community via sponsorship/donations etc
• What is provision of a quality service?

  Public sector organisations provide services that are necessary for the majority of citizens (health, education, refuse collection)
• What areas should be considered when carrying out the provision of a quality service?

  - The quality of the service

  - If it meets the need of different people

  - Comes within an allocated budget (the council tax/grants etc they recieve)
• What is customer satisfaction?

  Ensure that the product/service provided benefits the customer.
• What can customer satisfaction include?

  - Providing best value

  - High quality products/services

  - Innovative products
• What is innovation/enterprise?

  Striving to come up with new and improved ideas for their products/services.
• Why do companies innovate?

  - Increasing profits

  - Improve quality of service

  - Improve choice for consumers
• What are the objectives of the private sector?

  Earn profits from the goods/services they sell (otherwise may go out of business). May have to satisfy shareholders and pay dividends. (aka - profit maximisation, social responsibility, survival)
• What are the objective of the public sector?

  Do not have to earn profits as they do not sell products to the public. The primary objective is to provide ESSENTIAL services (refuse collection, schools, leisure facilities healthcare) to residents which may not be profitable if provided by private sector.
• What are the objectives of the third sector?

  Seeking to raise funds for their chosen 'cause' and also cover the costs of their operations.