Business Aims & Objectives

1. Business Aims & Objectives

2. Business Aims • An aim or goal is a statement of purpose • Business aims or goals describe the overall rationale of the business; he reasons why the firm is in business

3. Mission Statement • A mission statement is a written statement making clear to all stakeholders a firm’s overall aims and values • It describes what the company wants to achieve and how it wants to act • It sets out the vision and values of a business • It enables the stakeholders of a business to understand to understand why the business is doing what it is doing!

4. Difference Between Aims & Objectives • Aims • General statement of purpose • E.g. we want to grow business in European markets • Objectives • Measurable target • E.g. we want to achieve sales of €10 million in European markets in 2004

5. Why Set Objectives • Objectives give business a clearly defined target • Plans can then be made to achieve these targets • Can help motivate employees • Enables business to measure progress towards to its stated aims

6. Criteria for Business Objectives • Specific • Measurable • Achievable • Realistic • Timed

7. Levels of Business Objectives • Objectives are set at various levels in a business • Corporate objectives • Targets the whole business is trying to achieve • Often related to what the owners of the business want to focus on (e.g. survival, growth, profits) • Departmental objectives • Objectives for specific functions in the business • E.g. objectives for the marketing department to achieve • Need to be consistent with corporate objectives

8. Typical Business Objectives • Growth say by increasing sales and/or market share e.g. from 10% to 20% in next 12 months. Growth often allows firms to enjoy the benefits of • Economies of scale and the competitive advantage that comes from the resultant lower unit costs • Market leadership and the enhanced ability to set a price that meets objectives • Higher profits which mean higher salaries for managers and a higher share price for owners. • Profit say increasing return on capital employed to 5% by 2004 or improving earnings per share to maximise shareholder value and generating funds to support investment further and growth. Can mean making cost reductions a target • Survival small and simply want to continue in business by reaching break even within 12 months • Newly established firms may want to establish themselves in the market and ‘get known’ – they expect initial losses

9. Reasons Why Business Objectives Change Over Time • A business may achieve an objective and will need to move onto another one • E.g. survival in first year may lead to an objective of increasing profit in second year • Competitive environment might change • E.g. launch of new products from competitors • Technology might change product designs

10. Main Conflicts in Business Objectives • Growth versus profit • E.g. achieving higher sales in short term (by cutting prices) will reduce short-term profit • Short-term versus long-term • E.g. business may decide to accept lower cash flows in short-term whilst it invests heavily in new products or plant and equipment

11. Objectives of Public Sector Organisations • Required to deliver more than just a profit for shareholders • Many provide a form of public service (e.g. Royal Mail, BBC) in addition to commercial activities • May be involved with monitoring or control of private sector activities • E.g. Inland Revenue controls payment of tax by individuals and businesses • Aims of such enterprises would include ensuring compliance with law rather than, say, achieving a profit