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Business Objectives, objectives - goals or targets set by a business.,…
Business Objectives
Importance of clear objectives:
- Employees need something to work towards and motivate them to get bonuses.
- Owners might not feel motivated to work without them, leading to their business to 'drift', therefore this may result in a business failure.
- They help to decide the consequences and the next steps for the business
- It is easier to assess the performance of a business.
Financial Objectives
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Profit: to ensure revenue is greater than total costs. some businesses aim profit maximisation which will increase the productivity of the shareholders to get more dividends.
Sales: to ensure customers buy the business's products to ensure revenue is greater. High sales -> lower costs for the business -> larger market share -> higher public profile -> more wealth for the owners. high sales -> benefits to stakeholders(employees -> higher salaries).
Increase market share: market share is the percentage of sales that a company makes relative to all sales made in that market. Market share = total company sales / total industry sales * 100 = __%. To increase the proportion of the total market sales sold by the business. high market share -> higher costs -> higher profile in market -> easier to launch new products,
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Non-financial objectives
Social objectives: To help the local community; to address social problems; to protect workers; to protect the environment; to portray a positive image with stakeholders; to receive good publicity; to increase footfall and sales; to improve human well-being -> objectives linked to quality of service and reducing costs (reducing response time by emergency services or increasing rates of recycling)
Personal satisfaction: To demonstrate ability, talent, and a sense of personal achievement. investing money in your own business idea and seeing it develop into a successful business is a matter of great pride.
Independence & control: To be in total charge of every aspect in the business and to enable the business to make their own decisions, without consultation with others. however, being independent means work has to ben done and taxes have to be paid.
Challenge: People are motivated by setting challenges, decisions that exceed their business's objectives.
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diversify - if a business, company or country diverisfies, it increases the range of goods or services it produces.
financial objectives are more important to individuals that own their own businesses in private sector because they want to make money
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economies of scale - financial advantages (falling average costs) of producing something in very large quantities.
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