Objectives

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    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

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