chapter 5 business objectives
business objectives
are the aims or targets that a business works towards
benefits of settign up a business
descion making is less time consuming and easier as workers have clear targets to base desions on
setting business objectives increases motivation of workers and managers as they now have clear targets to work towards
setting business objecties reduces conflicts and helps to unit the business towards the same goals
managers can compare business performance to its objectives and can make changes if required
survival
a newly set up business
business facing economic recesssion period
new competitiors make business feel less secure
as a reponse business will decrease prices which will mean foresaking other business objectives like profit maximization
profit
private individuals usually aim for pfrots
why do managers want to increase profit
pay a return to owners for their investment in the business
provide finance for further investment into the business
returns to shareholders
profit is the total income of the business(revenue) less the total costs
why do we want to increase the returns to the shareholders
for managers to secure their job
to prevent shareholders from selling their shares
how do we increase the returns to the shareholders
increase the share price
increasing profit
market share
market share % = company sales * 100 / total market sales
good publicity
suppliers would want to supply well known companies
customers would want ot buy from well known companies
growth
secure jobs
higher salaries and status for managers
economies of scales due to expansion
providing service to the community
social enterprises usually have a social aim along with profit
social - provide employment and support for disadvantaged groups
finance- make profit to reinvest into the business and to make the organization work more towards its goals
environment - prtect the envirnment and prevent its pollution
why business objectives could change
company survivied for three years and now wants to maximize its profit
company is in a period of economic recession and has its main aim as survival
stakeholders
are people or a group that has a direct interest in the performance of the business
internal
external
customers
local community
government
owners
workers
managers
objectivee - want secure jobs , higher salariess
objective - want to expand the business and to get return on their investments in the business
objective - want to keep their jobs
objective- less pollution
objective- reasonably priced products according to their quality
objective - more employement rates