Business objectives

• what are business objective?

  • specific intended outcomes of a business strategy
  • anticipated end results of a programme of activities
  • targets that the business adopts in order to achieve its primary aims
• main purposes of business objectives are to:


  • make a clear statement of what needs to be achieved
  • provide a focus for all business activity
  • aid and inform management on decision making
  • help set targets for individual and group achievement
  • provide a means of measuring performance
• hierarchy of business objectives

  
• SMART objectives


  S - Specific, objective should state exactly what is to be achieved

  M - Measurable, needs to be able to determine if it has been achieved

  A - Achievable, objective needs to be realistic

  R - Relevant, should be relevant to the people achieving them

  T - Time bound, realistic deadlines need to be set
• mission statements


  the overriding goal of a business and the reason for its existence - missions provide a strategic perspective for the business and a vision for the future
• an effective mission statement:


  • differentiates the business from its competitors
  • defines the markets or business in which the business wants to operate
  • is relevant to all major stakeholders
  • motivates and inspires
• mission statements are often criticised because they are:


  • not always supported by the actions of a business
  • often too vague
  • not supported wholeheartedly by senior management
• corporate objectives


  the specific (SMART) targets that the business as a whole want to achieve
• functional objectives


  the specific objectives set for the individual functional areas of a business, designed to support the achievement of corporate objectives
• corporate objectives are usually set in terms of key performance measures including:


  • profit
  • return on investment
  • growth
  • business value
• examples of how functional objectives support corporate objectives


  corporate objective is to increase sales

  • functional objective is to successfully launch 5 new products (marketing)

  corporate objective is to reduce costs

  • functional objective is to increase factory productivity (operations)
• the overall direction for a business setting corporate objectives helps determine which specific objectives are set
• corporate objective = survival


  • priority for new businesses as a large number of start-ups fail in the first few years
  • also a common objective for loss-making businesses or businesses hit by competitive pressure
• corporate objective = revenue


  • crucial indicator of the performance of a business
• common revenue objectives


  • revenue growth
  • sales maximisation
  • market share
• corporate objective = cost efficiency/minimisation


  these aim to achieve the most cost-effective way of delivering goods and services to the required level of quality
• main benefits of achieving cost efficiency


  • lower unit costs
  • higher gross profit margin
  • higher return on investment
• common profit objectives


  • specific level of profit
  • rate of profitability
  • profit maximalisation
  • exceed market profit margins
• corporate objectives = employee welfare


  • more functional in nature rather than corporate
  • leads to better staff retention and quality of customer service
• corporate objectives = customer satisfaction


  • rarely a specific objective
  • loosely linked with customer service
• corporate jobs = social


  • corporate social responsibility is becoming more important, and is becoming more integrated in mission statements
  • however, not seen at the top of the objective hierarchy