1.4 BUSINESS OBJECTIVE

• Objectives of businesses


  • Private sector
  • Public sector
  • Social enterprises
• Corporate social responsibility (CSR)

  The triple bottom line - economic (financial), social and environmental objectives
• Mission statement, aims, objectives, strategy and tactics


  They are related in a hierarchy
• Objectives


  The goals of the business. They represent the outcomes or targets that the business wants to gain in order to achieve its aims
• Well defined objectives


  • They help the business be clear about what it wants to achieve
  • The performance of a business could be assessed by how effectively it achieves its objectives
• Objectives of private sector businesses

  • Profit maximisation
  • Profit satisficing
  • Growth
  • Survival
  • Corporate social responsibility (CSR)
  • Maximising short-term revenue
  • Increasing shareholder value
  • Increasing market share
• Objectives of social enterprises

  • Economic - make a profit to reinvest back into the business & provide some return for owners
  • Social - provide jobs or support for local, often the disadvantaged or poor community
  • Environmental - to protect the environment & to manage the business in an environmentally sustainable way
• Objectives from public sectors (government)

  • Access - available to all regardless of location or income
  • Quality - high quality services that do not cut corners
  • Affordability - services offered at prices that are cheaper than private sector or free at the point of use
  • Equity - available to anyone whatever their background, status, income, class, race, religion, etc.
• SMART objectives


  • Specific
  • Measurable
  • Achievable
  • Realistic
  • Time-limited
• Factors that influence the objectives of a business

  • Business culture
  • The size and legal form of the business
  • Private sector or public sector
  • The number of years the business has been operating
• Aims, mission statements, objectives and strategies


  They are related in a hierarchy

  
• Aims/Vision


  The business's overall purpose. The long-term goals which a business hopes to achieve.
• Mission statement


  A statement of the business's core aims, phrased in a way to motivate employees and to stimulate interest by outside groups.
• Objectives


  The goals of the business. They are the outcomes or targets the business want to gain in order to achieve its aims.
• Strategies


  The long-term plans of action of a business that focus on achieving its aims.
• Tactics


  How the corporate objectives are to be achieved.
• Effective decision-making requires clear objectives
• Common conflicts between corporate objectives


  • Growth versus profit
  • Short term versus long term
  • Stakeholder conflicts
• Reasons why businesses may change their corporate objectives over time


  • Business that have survived objectively may now want to objectively pursue growth or profit increase
  • Competition and economic environment may cause a firm to switch their objectives towards survival
  • Short-term objectives of sales may lead to long-term objectives of maximising profits
• Factors that determine the corporate objectives of a business


  • Corporate culture
  • The size and legal form of the business
  • Public or private sector business
  • The number of years the business has been operating
  • Ethical or moral concern
• Ethics


  Individual standards or moral values regarding what is right and wrong or good and bad
• Business ethics


  Moral principles and standards that guide behaviour in the world of business
• Ethical values vary greatly from person to person and situation to situation
• Ethical objective


  A deliberate attempt on the part of the company to take a position which is viewed as morally correct and appropriate in the eyes of stakeholders
• Influences on ethics


  • Family - especially parents
  • Values - religious principles
  • Experiences
  • Situation
• Reasons for firms to instill ethics or be socially responsible


  • An expectation of the public "to do the right thing"
  • It is the welfare and benefits of stakeholders that are at risk
  • Long term - it will enhance good image, good reputation
  • Decrease cost such as pilferage
  • Improve customer relationship -trust
  • Prevention is better than cure
  • Better environment
• Arguments against firms being ethical or socially responsible


  • Violation of profit maximisation
  • Cost too much to implement
  • Lack of skills
  • Lack of accountability
  • Lack of broad public support
• Ethical guidelines for managers

  • Obey the law
  • Tell the truth
  • Show respect for people
  • Stick to the golden rule - "do unto others what you expect others to do unto you"
  • Above all, do not harm
• A pattern of unethical behaviour will lose the trust and integrity of followers and the public