Business aims and objectives

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Notes de leçon

Aims and objectives

An aim is a broad desired direction or purpose, often longer term. An objective is a more specific target supporting it. Aims can include survival in the near term, so a fixed duration is not the sole distinction. Objectives help coordinate decisions and judge progress.
One common SMART version is specific, measurable, achievable, realistic and time-bound; another uses relevant for R. Use the convention taught for the task and test the underlying criteria. A precise target can still be unrealistic or encourage the wrong behaviour.

Test a fictional orders objective

Common aims

Businesses may seek survival, profit, growth, sales, market share, financial security or shareholder value. Non-financial motives can include independence, control, personal satisfaction, challenge, customer satisfaction and social or ethical purposes. Priorities differ between owners and organisations.
An environmental target should identify the impact, boundary, baseline and timescale. A social purpose does not mean that cash or financial viability can be ignored. Growth, profit, cash and market share are different measures and need not improve together.

Aims can have different purposes

Changing objectives

Objectives can change with performance, resources, the market, competition, technology, economic conditions or ownership. A start-up may prioritise survival, while an established firm may expand or may return to a survival focus during difficulty.
Review progress and assumptions rather than treating a target as permanent. In the fictional orders target, moving from 1,000 to 1,100 per month by December means 10% growth, but capacity and demand evidence are needed to assess whether it is achievable.

Stakeholders

Stakeholders have a relevant interest in, can influence, or can be affected by business activity. Common groups include owners, managers, employees, customers, suppliers, lenders, government and local communities. Shareholders are a particular ownership group, not every stakeholder.
Typical interests include employee pay and security, customer value and reliability, supplier orders and agreed payment, lender repayment and community impacts. Individuals within a group can disagree, and one person may hold several roles. Treat these as plausible interests to test against a case.

Typical stakeholder interests

Conflicts

A decision can create a trade-off: higher pay may raise costs and reduce short-term profit if sales, productivity and other costs stay unchanged. Price cuts may benefit customers but lower contribution per sale at unchanged unit costs. Explain the mechanism rather than assuming any two groups must conflict.
Improved productivity, retention or sales may offset costs, while survival and reliable service can be shared interests. Consultation, negotiation and alternative options can manage disagreement, although not every preference can always be fully met.

A pay decision can create a trade-off

Measuring success

Match the measure to the objective: use profit for a profit target, consistent sales for a sales target, and a defined market for market share. Fictional value market share = £60,000 ÷ £400,000 × 100 = 15% for the same period. It does not by itself establish profitability.
Customer survey results need sample and question checks; staff turnover needs a defined period and interpretation; social or environmental targets need meaningful outcomes and baselines. Financial viability and relevant non-financial evidence together support a judgement about success.

Choose evidence that fits the objective

Diapos

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1.What is a business aim?
Easy
- Aa broad desired direction or purpose
- Ba daily task
- Ca tax
- Da wage
2.What is an objective?
Easy
- Aa vague wish
- Ba tax
- Ca wage
- Da more specific target supporting an aim
3.What is profit?
Easy
- Acosts only
- Bwages
- Crevenue minus costs
- Drevenue plus costs
4.What is market share?
Easy
- Aits wages
- Ba firm's percentage of total market sales
- Cits profit
- Dits costs
5.What is growth as an aim?
Easy
- Aincreasing the size of the business
- Bclosing the business
- Ccutting sales
- Dreducing staff only
6.What is survival as an aim?
Easy
- Aclosing
- Bmerging
- Cselling shares
- Dstaying in business
7.What is a social objective?
Easy
- Aavoiding customers
- Bcutting wages
- Chelping society or the community
- Dmaximising profit only
8.Which group has a direct employee-role interest in pay and job security?
Easy
- Alenders
- Bemployees
- Ccustomers
- Dcompetitors

Plus de questions

9.Which group has a direct buyer-role interest in product quality and value?
Easy
- Acustomers
- Bowners
- Cmanagers
- Dthe government
10.Which group has a direct interest in orders for its supplies and payment on agreed terms?
Easy
- Aemployees
- Bcustomers
- Clocal residents
- Dsuppliers
11.Which group includes shareholders seeking returns on their ownership investment?
Easy
- Asuppliers
- Btrade unions
- Cowners
- Dcustomers
12.Which group has a direct public-authority role in enforcing business laws and collecting taxes due?
Easy
- Asuppliers
- Bthe government
- Ccustomers
- Demployees
13.Which group is directly affected by jobs, noise and pollution near a business site?
Easy
- Athe local community
- Bowners only
- Csuppliers only
- Dlenders only
14.Which group expects repayment and interest on an agreed interest-bearing loan?
Easy
- Acustomers
- Bemployees
- Csuppliers
- Dlenders
15.Which illustrates a possible stakeholder trade-off, if other factors stay unchanged?
Medium
- Ano one wants anything
- Bcustomers want higher prices
- CEmployees seek higher pay while owners seek lower costs to increase short-term profit
- Downers and employees both want lower wages
16.Which could create a price-and-margin trade-off if unit costs stay unchanged?
Medium
- Acustomers want higher prices
- BCustomers seek a price cut while owners seek to preserve margin per sale
- Ceveryone wants the same
- Dno stakeholder cares
17.What is customer satisfaction?
Medium
- Ahow pleased customers are with the product
- Bthe firm's profit
- Cthe firm's assets
- Dthe wage bill
18.What does sales-volume maximisation mean?
Medium
- Aselling nothing
- Bcutting costs only
- Cavoiding customers
- Dseeking the largest number of units sold within relevant constraints
19.What is an ethical aim?
Medium
- Ahiding costs
- Bavoiding tax
- Cacting morally, such as fair treatment of workers
- Dmaximising profit regardless
20.What is an environmental aim?
Medium
- Aavoiding recycling
- Breducing harm to the environment
- Cmaximising pollution
- Dignoring waste
21.What might a new business aim for first?
Medium
- Asurvival
- Bbeing the global market leader immediately
- Cclosing
- Dmerging
22.What do objectives help with?
Medium
- Aavoiding planning
- Bremoving aims
- Cignoring performance
- Dmeasuring progress
23.Why might aims change as a business grows?
Medium
- AAims are legally required to remain unchanged forever
- BGrowth removes the need to set any objectives
- CResources, performance or market conditions may change
- DEvery business must adopt the same aims as it grows
24.Why must stakeholder conflicts be managed?
Medium
- Ato avoid customers
- Bto keep relationships and avoid damaging the business
- Cto remove stakeholders
- Dto avoid profit
25.Why might a firm prioritise profit over growth early on?
Medium
- Ato strengthen viability while avoiding cash demands from rapid expansion
- Bto avoid income
- Cto close
- Dto sell shares
26.Why might social aims improve reputation?
Medium
- Athey remove customers
- Bthey cut profit to zero
- Cthey hide the brand
- Dcredible actions may build trust among customers who value them
27.Which measure shows a firm’s sales relative to total sales in a defined market?
Easy
- Arent
- Btax rate
- Cmarket share
- Dwage bill
28.A business aim is a broad desired direction or purpose.
Easy
True or false?
29.All stakeholders always agree.
Easy
True or false?
30.Profit is revenue minus costs.
Easy
True or false?
31.New businesses often aim for survival.
Easy
True or false?
32.A measurable objective makes it easier to check progress.
Medium
True or false?
33.Which are common business aims?
Medium
- Asurvival
- Bprofit
- Cgrowth
- Dmarket share
- Esabotage
34.Which are stakeholders?
Medium
- Aowners
- Bemployees
- Ccustomers
- Dsuppliers
- EA person with no connection to, influence on or effect from the business
35.Explain how stakeholder aims can conflict.
Medium

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