Influences on Financial Objectives
Business: AQA A Level (2023 Specification), topic 5.1.2
Influences on Financial Objectives
When considering financial objectives, several internal and external influences must be considered.
Overall business objectives
- Overall business objectives must be considered when setting finance objectives as finance objectives must support the business’ overall aim.
- If the business' strategy is to maximise revenue, then financial objectives to maximise profits may not line up incentives well. Amazon could be an example of someone who chooses to maximise revenue.
Different departments
- The objectives of other departments must be considered when setting finance objectives as all departments must be working towards the same overall aim.
Shareholders
- The actions of shareholders must be considered when setting finance objectives as shareholders need to be satisfied.
- For example, Tesco considers the views of its shareholders when deciding on objectives as the influence of shareholders and their desire to receive dividends may affect investment objectives.
Competitors
- The presence of competitors must be considered when setting finance objectives as competitors can affect demand and therefore revenue.
Test yourself on Influences on Financial Objectives
Who, primarily, needs to be satisfied by the objectives of the financial department?