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T-03
Aims and Objectives
Aims and objectives
Businesses have different aims and objectives that can change over time. Some businesses
chose to use SMART objectives.
Aims and objectives of different business types
An aim or objective is a statement of what a business is trying to achieve over the next 12
months. For example, a business can set itself any of these targets:
survival
increased profit
growth
increasing market share
Business (9-1)-IGCSE By:Mr.Malin Ranasinghe Page 1
The importance of clear Objectives
Reason Example
Employees need something to work Sales staff might get bonuses if they
towards. Objectives help to motivate reach certain sales targets.
people.
Without objectives owners might not Owners might allow their business to
have the motivation needed to keep the drift, this might result in business failure
business going
Objectives help to decide where to take a If a business aims to grow by 10% and
business and what steps are necessary to its home market is crowded, it may
get there decide that launching products overseas
might be the best way to achieve this.
It is easier to assess the performance of a If objectives are achieved it could be
business if objectives are set. argued that the business has performed
well.
All businesses have aims that they want to achieve, and objectives that help them
plan what they have to do to achieve those aims.
AIMS are the overall goals and purposes that the business was set up to fulfil.
OBJECTIVES are specific targets that must be achieved if the business is to fulfil its
aims.
Objectives
Financial Non financial
objectives objectives
1. Survival 1. Social objectives
2. Profit 2. Personal satisfaction
3. Sales 3. Challenge
4. Increase market share 4. Independence and control
5. Financial security
Business (9-1)-IGCSE By:Mr.Malin Ranasinghe Page 2
A business might aim to:
Make a profit
Amount of money after paying all expenses.
Need good profit levels to survive
Provide goods/services to the local/wiser community
All businesses make goods or provide goods and services.
Some provide a mix, i.e. Cargill’s food city and financial services
Some provided locally, i.e. newsagent or chemist
Some provided internationally, i.e. Coca-Cola
Surviving as a business or expanding
High profits could mean a business expanding its goods range or expand jobs
Some organisations get bigger by taking over other businesses, a “take-over”, i.e.
FB bought Watsapp
Maximising sales or improving quality
Two major aspects of providing goods and services that businesses must
consider:
1. The quality of their goods and services. Quantity relates to the performance
of a product, how long it lasts, how well it is made, what additional features
are included
2. The price they charge for them. Quality goods cost more to make and buy.
Providing a highly competitive service
Some sell large volumes at low prices all the time,
Providing charitable or voluntary services
Provide a service, i.e. Lions club
Money raised goes to support a special cause
Usually have volunteers (unpaid workers)
Oxfam is the richest charity in the UK
Being environmentally friendly
Pollution, waste disposal, recycling and energy use
Do not want bad publicity over environmental issues
Example: some car manufacturers are trying to build gas/electric cars instead of
unleaded petrol
Key areas: environmentally friendly materials, revising products/packaging,
disposing of waste properly.
Other Private sector objectives
Market share
Profit maximisation
Growth
Diversification
Business (9-1)-IGCSE By:Mr.Malin Ranasinghe Page 3
Setting objectives
In most businesses, the owners decide on the objectives for the business.
When a business first starts trading it has few loyal customers and no reputation. The most
likely objective for a start-up business is simply survival. As the business grows and begins
to win market share, the aim may shift towards expansion and/or increasing profits.
OBJECTIVES
The objectives of a business are closely related to its aims. Objectives are the medium to
long term goals or targets that business intend to achieve. According to professor peter
F.drucker Objects should be SMART:
SMART Objectives
1. Specific-objectives should be concise and clear
2. Measurable defined in way that can be measured.ex:Increase Profits by 10%
3. Achievable they must be targets that the business can realistically meet.
4. Realistic-Objectives should be sensible and practical.
5. Time bounded-Objectives should be attainable within a given time period.ex:12
months
An example of a SMART objective is 'to increase profits by 10% within the next 12 months'.
SMART objectives allow the performance of a business to be assessed.
Business (9-1)-IGCSE By:Mr.Malin Ranasinghe Page 4
Why business objectives change
1. Market conditions
2. Technology
3. Performance
4. Legislation
5. Internal reasons
Relationship between business objectives
. Survival .
Business (9-1)-IGCSE By:Mr.Malin Ranasinghe Page 5
Several of the business objectives mentioned previouslyare closely related to each
other.For example, business that aims to grow could make more profits in the
future.This is because a larger firm will enjoy more revenue and this is likely to result in
more profit.Similarly, a business aiming to grow is also likely to increase its market
share.
Finally, a business may have more than one objective. For example, a business may
try to grow and try to become a market leader.Also long –term objectives may differ
from short –term objectives.For example, in the early stages of the business start-up
survival may be the main objective.But in the long term profit will become more
important.
For your knowledge…
Mission Statement
Businesses have a main aim or an overall aim which is set up in their “Mission
Statement”.
It’s a brief summary of firms aims and objectives
Look at various large businesses for examples
Logo Mission statement
Bring inspiration an innovation to every athlete
To help people and business throughout the
world realizing their full potential
Strives to be the leader on the sporting goods
industry with brand built on a passion for sport
and a sporting life.
Mission Statement focus on:
Company values
Benefits of the business to the community
How consumers are satisfied
Provide a plan for the future.
Business (9-1)-IGCSE By:Mr.Malin Ranasinghe Page 6
Aims and objectives
1 What is a business objective?
A statement of what the company has achieved
A statement of what the company is trying to achieve
A statement of what the company is currently achieving
2 What is the first aim of a business?
To survive
To make a profit
To grow
3 Who normally decides on business objectives?
Employees
Customers
Owners
4 What does an objective mainly help staff to focus on?
Shared aims
Suppliers
Customers
5 Who are stakeholders?
Any group interested in the activities of the business
Any group interested in the activities of government
Any group interested in the activities of shareholders
6 Which of the following best describes a financial objective?
It is not easily measured
It is easily measured
It is personal to the owner
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7 What is an example of stakeholder consideration?
When owners keep all the profits for themselves.
When some profit is sacrificed to pay staff an annual bonus.
When owners decide to increase profits.
8 In the long run, what is it that all private sector firms must aim to do?
Make a difference
Make products
Make a profit
9 Which is the best example of a SMART objective?
To make a 5% profit
To make a 5% profit soon
To make a 5% profit in the next year
10 Increasing market share is an example of:
An objective
Revenue
A business plan
Business (9-1)-IGCSE By:Mr.Malin Ranasinghe Page 8
