1.5.3 Business Objectives

• A business objective is a target set by the business in the short to medium term to help achieve a long term aim.
• Objectives must be SMART: Specific, Measurable, Agreed/Achievable, Realistic, and Time bound.
• Main functions of objectives are to co-ordinate employees, motivate employees and reviewing business success.
• A business objective includes survival. This means their aim is to keep on trading rather than to submit to a commercial pressure of closing down. This could be at times like a recession, intense competition or in times of crisis.
• Sales maximisation is where the entrepreneur focuses on either the value or volume of sales. Increasing the value of sales means higher profits can be earned. Increasing the volumes of sales may not increase profits if they've lowered the prices or increased costs.
• Increasing market share may be set as an objective because a new business is trying to gain a foothold in the market or make their business more well-known. Can involve heavy promotion, or low prices to tempt the customers away from competitors. This can lead to making it easier to persuade retailers to stock their products. Therefore, reaching more customers and increasing sales, market share and potentially profit.
• Improving cost efficiency may be set as an objective because it will save the business money. This could lead to the business being able to make each product for a lower cost. Therefore, the business should be able to generate more profits on each item sold. It could also allow a business to reduce its prices to customers and increase the volume of sales and profit.
• Improving employee welfare could be set as an objective because workers may be considered an important resource to the business. This could lead to more motivated workers as they feel they are looked after and valued. Therefore, they are more likely to work harder and take more care in their work. The quality of the product could increase as a result which might lead to more sales.
• Increasing customer satisfaction could be set as a business objective because customers are the main source of income/revenue for the business. It may involve making better quality products, delivering better customer service and product innovation. This could lead to increased customer loyalty, increased sales volumes and may even allow the business to charge higher prices. Therefore, sales revenue and profit are likely to increase.
• Social objectives could be seen as an objective because there is a growing expectation in society for businesses to behave as good citizens. This could lead to the public image of the business improving and may make them stand out from other businesses in the market. Therefore, the business is likely to benefit from increased sales and increased profits.