BUSINESS OBJECTIVES &

STAKEHOLDER OBJECTIVES
An objective is an aim or target to work towards

Business objectives are the

aims or targets that a
business works towards
 Key Terms - Glossary

 Business Objectives – The aims or targets that a business works

towards.
 Profit – The total income of a business (sales revenue) less total costs
 Market Share – the proportion of the total market sales achieved by one
business.
 A Social Enterprise – Has social objectives as well as an aim to make a
profit to reinvest back into the business.
 A Stakeholder – Any person or group with a direct interest in the
performance and activities of a business.
 Executives - managers in an organisation or company who help make
important decisions
 Diversify - if a business, company or country diversifies, it increases the
range of goods or services it produces
 Financial Return - monetary return
 Profit Maximization - making as much profit as possible in a given time
period
 Shareholders - owners of limited companies
 Objectives are often different for different businesses, A business
may have been formed by an entrepreneur to provide
employment and security for the owner or his/her family.
 It could have been started to make as big a profit as possible for
the owner or might have had a more charitable purpose in mind.
Many of the worlds charities are huge.
 The most common objectives for private sector businesses include:
 Business Survival
 Profit
 Returns to Shareholders
 Growth of the Business
 Market Share
 Service to the community
 BENEFITS OF SETTING OBJECTIVES
■ Give workers and managers a clear target
■ Helps in decision making
■ Clear and measurable objectives unites whole business
■ Performance can be compared with objectives to check
success
DIFFERENT BUSINESS OBJECTIVES

Business
Survival

Service to
Profit
community

BUSINESS
OBJECTIVE
S

Returns to
Market
shareholde
share
rs

Growth of
business
 SURVIVAL

■ When the business is new

■ Entry of new competitors
■ When economy is in recession
 PROFIT

Profit is the total income of a

business (revenue) less total costs

Profits are required to

• Pay a return to owners
• Provide finance for
expansion

Risk of losing customers if price is hiked to

increase profit
 RETURNS TO SHAREHOLDERS

■ Increased returns are given to discourage shareholders

from selling their shares
■ Returns are increased un two ways
– Increasing profit
– Increasing share price
 GROWTH
■ The owners and managers of business
aim for growth in size of business for
the following reasons
– To make jobs secure
– Increase salaries and status of
managers
– Open up new possibilities and help
to spread the risks of business by
moving into new products and new
markets
– Obtain a higher market share from
growth in sales
– Obtain cost advantages called
economies of scale from business
expansion
 MARKET SHARE

Market share is the percentage of

total market sales held by one
brand or business

Market share %= (Company sales/Total Market sales)*100

Increased market share gives a business:

• Good publicity
• Increased influence on suppliers
• Increased influenced over customers
 PROVIDING SERVICE TO COMMUNITY

Social enterprises are operated by private A social enterprise has social

individuals but they do not have profit as an objectives as well as an aim to
objective. Social enterprise has Social make a profit to reinvest back
Objectives and the following objectives: into the business

• Social -To provide jobs and support

disadvantaged groups in society
• Environmental - To protect environment
• Financial – To make a profit to invest back
into the social enterprise
Eg: Rangsutra in India helps poor village
communities to develop skills in craft and
clothing
PERSONAL SATISFACTION
Many business owners set up a business because they think
they will be happier and feel more satisfied in their work
environment than when working for an employer. Such
owners are likely to enjoy taking risk and seeing their idea
succeed. Some owners have developed their hobby into a
business. For
example, a fitness enthusiast might become a personal
trainer or someone who likes baking might start a business
making wedding cakes. Investing money in your own
business idea and seeing it develop into a successful
business is likely to be very satisfying and a matter of great
pride.
 INDPENDENCE & CONTROL
Some people want to be ‘their own boss’ – they want to be in
control. This is an important non-financial objective for many
business owners. These entrepreneurs are driven by the desire to be
independent and to take control of their own futures. The freedom
to make all the decisions when running a business is very appealing.
Some people often dislike being told what to do at work. According
to an article and poll by Startups.co.uk, having the independence to
make your own decisions is considered the key benefit of being an
entrepreneur. Nearly 90 per cent of the people surveyed said this
was very important. In practice this independence may be limited:
work has to be done; taxes have to be paid; those financing the
business, such as a bank giving a loan, need to be satisfied that the
business is doing sufficiently well. However, those who own their
own business, in general, do have more independence than those
who work for an employer.
 WHY BUSINESS OBJECTIVES CHANGE

■ It is very unusual for a business to keep the same objectives forever.

Below are examples of situations that cause objectives to change:
 A business et up has recently survived for 3 years and the owner now
wants to work towards a higher profit.
 A business has achieved a higher market share and now the objective
of earning higher returns for shareholders.
 A profit making business operates in a country facing a serious
economic recession so now has the short term objective of survival.
 OBJECTIVES OF PUBLIC SECTOR
■ Financial - Meet profit target by Government
■ Service - Provide service to public and meet quality target
■ Social - Protect and create employment
 CASE STUDY: MICROMAX (Pg 11)

 What are two reasons why Micromax is starting to struggle?

 What do you think is the main aim of Micromax at this time?
 What measures might Micromax take in order to achieve this aim?
 In groups, produce a spider diagram to show the different possible
objectives a business might have. Present your ideas to the rest of
the class.
 CASE STUDY: SUPERSKISWISS.COM :
CHAPTER QUESTIONS (Pg 18)

■ What is meant by a business objective? Use this case as an example.

■ Some businesses have non-financial objectives. Name two examples of
non-financial business objectives.
■ Work out the change in sales revenue between 2010 and 2017.
■ Describe one benefit to SuperSkiSwiss.com of sales growth.
■ SuperSkiSwiss.com may be concerned about social responsibility. What
evidence is there in the case study to support this view?
■ How might a company like SuperSkiSwiss.com change its objectives as
it evolves? Provide two reasons in your analysis.