1.3.2

Business Objectives

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The Role of Objectives in Running a Business

Objectives set targets for particular aims that a company wants to achieve. Objectives are more specific than aims. Once the management of a business have set its overriding purpose or aim, they must then define the business objectives.

Objective to profit maximise

Objective to profit maximise

  • E.g. if profit maximisation is the business' aim, then an objective might be to earn over £10,000 in revenue or keep overall costs to a maximum of £8,000.
Objectives are measurable targets

Objectives are measurable targets

  • Specific business objectives help firms to achieve their aim as they include measurable targets for the firm to work towards.
  • Targets allow a business to see which areas (e.g. growth, sales, profits) need to be improved.
  • Having targets for objectives can help a business to improve continuously.

Different Businesses Have Different Objectives

There are 3 key factors that influence a firm’s objectives:

The size of a business

The size of a business

  • New companies, like a Brexit consultancy set up in 2016, might focus on growth and survival because of the need to establish themselves and their high chance of failure.
  • This might mean they need to focus more on short-term objectives.
  • Smaller companies like Revolut or Monzo (banking apps) rely much more on word of mouth. Customer satisfaction may be a key objective.
  • Larger businesses or companies (like Tesco plc) face more scrutiny from the public.
The level of competition

The level of competition

  • If a business is operating in a highly competitive market, then its objectives may change from increasing market share or growth to survival.
    • Survival is important when there is a lot of competition as it represents the likelihood of a business to survive when faced with high competition.
  • A price war between rivals drove out supermarket Kwik Save from the supermarket industry in 2007.
Type of business

Type of business

  • Not-for-profit businesses will usually focus more on social and ethical objectives than for-profit firms.
    • For example, TOMS shoes donate a pair of shoes to children in Africa for every pair of shoes that you buy.
Jump to other topics
1

Investigating Small Business

1.1

Enterprise & Entrepreneurship

1.1.1The Dynamic Nature of Businesses1.1.2Risk & Reward1.1.3The Role of Business Enterprise1.1.4The Role of Business Enterprise 21.1.5The Role of the Entrepreneur1.1.6End of Topic Test - Dynamic Nature of Business1.1.7Grade 9 - Dynamic Nature of Business
1.2

Spotting a Business Opportunity

1.2.1Customer Needs1.2.2Market Research1.2.3Market Segmentation1.2.4The Competitive Environment1.2.5Primary & Secondary Market Research1.2.6End of Topic Test - Business Opportunities1.2.7Application Questions - Business Opportunities1.2.8Exam-Style Questions - Market Segmentation1.2.9Diagnostic Misconceptions - Competition
1.3

Putting a Business Idea into Practice

1.3.1Business Aims1.3.2Business Objectives1.3.3Business Revenues & Costs1.3.4Costs - Calculations1.3.5Revenue - Calculations1.3.6Business Profits & Break-Even Analysis1.3.7Profits & Losses - Calculations1.3.8Interest - Calculations1.3.9Cash & Cash Flow1.3.10Cash & Cash Flow 21.3.11Cash Flow - Calculations1.3.12Sources of Business Finance1.3.13End of Topic Test - Business in Practice1.3.14Grade 9 - Business in Practice1.3.15Exam-Style Questions - Business in Practice1.3.16Diagnostic Misconceptions - Profit1.3.17Diagnostic Misconceptions - Company vs Business1.3.18Diagnostic Misconceptions - Economies of Scale1.3.19Diagnostic Misconceptions - Cash Flow1.3.20Diagnostic Misconceptions - Break-even1.3.21Diagnostic Misconceptions - Fixed Costs
1.4

Making the Business Effective

1.4.1The Options for Start-Up & Small Businesses1.4.2Limited Liability1.4.3Franchising & Not-For-Profits1.4.4Business Location1.4.5The Marketing Mix1.4.6Business Plans1.4.7End of Topic Test - Effective Business1.4.8Application Questions - Effective Business1.4.9Exam-Style Questions - Business Plans
1.5

Business Stakeholders

1.5.1Business Stakeholders1.5.2Technology & Business1.5.3Legislation & Business1.5.4Legislation & Business 21.5.5The Economy & Business1.5.6External Influences1.5.7End of Topic Test - Business Stakeholders1.5.8Grade 9 - Business Stakeholders1.5.9Diagnostic Misconceptions - Recessions
2

Building a Business

2.1

Growing the Business

2.1.1Business Growth2.1.2Finance2.1.3Changes in Business Aims & Globalisation2.1.4Ethics & Business2.1.5The Environment & Business2.1.6End of Topic Test - Growing a Business2.1.7Application Questions - Growing a Business2.1.8Exam-Style Questions - Business Growth
2.2

Making Marketing Decisions

2.2.1Product2.2.2Product Life Cycle2.2.3Price2.2.4Pricing Methods2.2.5End of Topic Test - Product & Price2.2.6Grade 9 - Product & Price2.2.7Promotion & Advertising2.2.8PR & Sales Promotions2.2.9Sponsorship & Product Placement2.2.10Promotional Mix2.2.11End of Topic Test - Promotion2.2.12Application Questions - Promotion2.2.13Exam-Style Questions - Promotional Mix2.2.14Place & Wholesalers2.2.15Direct to Consumer2.2.16E-commerce & M-commerce2.2.17Diagnostic Misconceptions - Decreasing Price2.2.18Diagnostic Misconceptions - Advertise vs Promote2.2.19Diagnostic Misconceptions - Social Media
2.3

Making Operational Decisions

2.3.1Job Production2.3.2Batch & Flow Production2.3.3Working with Suppliers2.3.4Effective Supply Chains2.3.5Just In Time & Just In Case2.3.6Managing Quality2.3.7Total Quality Management2.3.8The Sales Process2.3.9End of Topic Test - Operational Decisions2.3.10Grade 9 - Operational Decisions2.3.11Exam-Style Questions - Managing Stock2.3.12Diagnostic Misconceptions - JIT vs JIC
2.4

Making Financial Decisions

2.4.1Gross Profit & Net Profit - Definitions2.4.2Gross Profit - Calculations2.4.3Net Profit - Calculations2.4.4Rate of Return2.4.5Rate of Return - Calculations2.4.6Research & Financial Data2.4.7Marketing Data2.4.8Percentage Change - Calculations
2.5

Making Human Resource Decisions

2.5.1Organisational Structures2.5.2Organisational Structures 22.5.3Recruitment2.5.4Effective Recruitment2.5.5Training a Workforce2.5.6Motivating a Workforce2.5.7End of Topic Tests - Human Resources2.5.8Application Questions - Human Resources2.5.9Exam-Style Questions - Human Resources2.5.10Diagnostic Misconceptions - Owners vs Shareholders2.5.11Diagnostic Misconceptions - Internal Recruitment2.5.12Diagnostic Misconceptions - Employee Motivation

Practice questions on Business Objectives

Can you answer these? Test yourself with free interactive practice on Seneca — used by over 10 million students.

  1. 1
    Which of these is true?Multiple choice
  2. 2
    If profit maximisation is a new biscuit business' aim, which of the following could NOT be one of their key objectives?Multiple choice
  3. 3
    Features of business objectives:True / false
  4. 4
    Smaller companies like Revolut or Monzo (banking apps) rely heavily on word of mouth. Which is most likely a key objective for them?Multiple choice
  5. 5
    Which objectives do not-for-profit businesses usually focus more on compared to for-profit firms?Multiple choice
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Business Aims

Business Revenues & Costs