The Organization and Importance of Business Objectives

The Organization The importance of business objectives Aims: Written statement making it clear to all stakeholders a firm’s overall aims and values. This is found in the mission statement, and enables stakeholder to understand why the business is doing what it is doing. Objectives should be: ● ● ● ● ● Specific (This is to make sure you know exactly what you want) Measurable (So you can tell if you are making improvements, and vice versa) Achievable (Realistic, something that is possible) Relevant (Related to what business wants) Time – related (Should be completed in a realistic time) Objectives: ● ● ● ● Provide clear end purposes towards which to work – Motivates employees Enable everyone involved in a business to focus on these purposes Make it possible to check on progress and to make improvements Plans/strategies made to achieve targets Difference between aims and objectives: ● ● Aims: Gives business clearly defined target (e.g. grow business in European markets) Objectives: Measurable target (e.g. achieve specific number of sales) Types of Objectives: ● ● ● ● ● ● ● ● ● ● Market Share Growth Profitability Survival Customer satisfaction/loyalty Employee satisfaction Ethos Environmental Quality Productivity/Efficiency Corporate Objectives: ● ● Targets what whole business is trying to achieve Often relate to what the owners of the business want to focus on Departmental Objectives: ● ● Objectives for specific functions in the business (e.g. for the marketing department) Need to be consistent with corporate objectives Why objectives change over time: ● ● ● ● Evolving or changes in business Competitive environment changing Technology changes Market/customers changing Key Points: ● ● ● Businesses work to broad goals, which may be broken down into objectives Objectives should be SMART (specific, measurable, achievable, relevant and time – related) Broad objectives usually relate to growth, profit and market share. 2.2 – Stakeholders and their different objectives Stakeholder: People who have an interest in the decisions taken by the business. There are two types, internal and external. Internal Stakeholders External Stakeholders Owners: May be a single owner in a sole – trader business or partners in a partnership. In a company, shareholders are the owners. Without owners the business would not exist; they are risk takers. They like to see their share of profit increasing, and the value of their business rising. Local and national communities: Actions of businesses can have major effects on communities. They watch out for the effect on the community and want a safe and preserved area. Employees: Their stake is that the company provides them with a living. They want security of employment, promotion opportunities and good rewards. Ideally they want to work for a company that they are proud of. Customers: Want a company to produce high-quality, value for money products. Suppliers: Want steady orders and prompt payment; they also want to feel valued by the company that they supply. Governments: Want business to be successful – to create jobs and pay taxes. They want to see prosperous businesses that take full responsibility for looking after the welfare of society. Pressure Groups: Organised with particular interests, and are interested in the welfare of society. Trade Unions: Represents the interests of groups of employees; seek to secure high wages and better working conditions for their members. Employers’ Association: Employers equivalent of trade unions; they represent the interests of the employers. Key Points: ● ● Some stakeholders have the same interests, but their interests may also differ and conflict Owners are very important stakeholders. They play a key part in setting up and ensuring the continual success of the business. Aims of the private and public sectors Aims and objectives in the private sector: ● ● ● ● Making a profit to survive and grow Building a strong brand reputation Winning customer loyalty Coming up with exciting new ideas and innovations Aims and objectives in the public sector: ● ● ● ● Expected to meet wider responsibilities to the community, and provide more of a public service. Breakeven (to continue to be able to deliver services) Efficiency (to provide best possible service) Deliver a quality service (required to do so rather than make a profit) Key Points: ● ● ● Aims and objectives give organizations a direction to work towards. Private sector organizations seek to make a profit, usually the main focus for aims Public sector organizations may seek to make a profit but will focus on public service.