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1.5.3 Business objectives - Coggle Diagram
1.5.3 Business objectives
Aim
A broad target or goal set by the business for the long term, also known as the businesses mission.
Profit maximisation is a common aim for businesses.
Objective
A specific target or goal set by the business in the short to medium term help achieve an aim.
Businesses usually have more than one objective they are working towards at any time.
Survival
Before a business can concentrate on maximising profits, they may need to solely focus on surviving.
Poor cash flow management is one of the main reasons why businesses may fail, because if the business expands to fast they'll have high costs before they've seen any increases in sales.
Once a business breaks even they can focus on objectives other than survival.
Maximising profit
Profit objectives will help the business monitor how well its achieving its overall profit aim.
Sales maximisation
increases market share = more profits
Market share
important for a new business that's trying to gain a foothold and establish itself in a new market.
more market share means the businesses is more known which means more sales as customers and retailers will trust them more.
heavy promotion is needed or low prices to compete.
Cost efficiency
reducing unit costs
means the business can make more profit on each item or reduce prices and increase its sales
can be achieved by taking advantage of economies of scale or more efficient production techniques such as lean production (waste minimisation)
Employee welfare
a more motivated workforce is likely to be more productive
motivated staff may produce better quality work which may reduce wastage costs.
Customer satisfaction
a satisfied customer becomes a loyal customer which means repeat purchases.
which means more revenue and may allow a firm to charge more for its products.
Social
customers may be more likely to buy from a firm which is socially responsible.
some firms will have their overall objective as solving a social problem