Scribd
Upload
51 views3 pages

Business Need To Have Objectives For The Following Reasons

The document discusses several objectives that businesses aim to achieve, including survival, profit maximization, sales maximization, increasing market share, cutting costs, improving employee welfare, customer satisfaction, and social objectives. It provides details on each objective, such as how profit maximization involves keeping costs low and prices high to generate the most profit, while sales maximization focuses on selling as much as possible. It also explains how objectives like increasing market share, cutting costs through economies of scale, improving employee welfare, and increasing customer satisfaction can help businesses be more competitive and profitable.

Uploaded by

Hadeel Dossa
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
51 views3 pages

Business Need To Have Objectives For The Following Reasons

The document discusses several objectives that businesses aim to achieve, including survival, profit maximization, sales maximization, increasing market share, cutting costs, improving employee welfare, customer satisfaction, and social objectives. It provides details on each objective, such as how profit maximization involves keeping costs low and prices high to generate the most profit, while sales maximization focuses on selling as much as possible. It also explains how objectives like increasing market share, cutting costs through economies of scale, improving employee welfare, and increasing customer satisfaction can help businesses be more competitive and profitable.

Uploaded by

Hadeel Dossa
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 3

The aims of the business are what the business wants to achieve in the long term.

They tend to
be general so like being the ‘’best’’ in the market. The objectives of a business are the goals or
targets that need to be meet in order to achieve an aim. Business are more likely to be
successful if they set clear objectives. Business need to have objectives for the following
reasons:
-employees need something to work towards, objectives help motivate people.
- without objectives owners might not gave the motivation needed to keep business going, they
might lose control and allow bussines to become aimless.
-objectives help owner decide where to take the business and what steps are necessary to get
there.
- Direction refers to where your companies headed. As a startup, your company’s direction
refers more to the future of the company, rather than where you’re headed in the coming
weeks or months. Your business goals and objectives determine your overall direction.
-
1)It is easir to assess the performance of the business is the objectives are SMART:
Specific
Measurable
Agreed
Realistic
Time specific

Survival:
when a business first starts trading it may be at risk as owners may lack experience and there
maybe shortage of resources therefor a target for a new business may be simply to survive. A
business may struggle to survive if new competitors enter market, and if they have cheaper
products or more financial resources

profit maximisation
without profit business would not exist. However, some business focuses more aggressively
usually because the owners want to make as much profit as possible. This is called profit
maximisation; this is more likely if the business is owned by shareholders. Theses owners need
to maximise the returns on their investments to mee the needs of their clients.
They will try keep costs as low as possible while raising prices as high as they can, skim pricing is
often used.
- This means operating the business at a level where it achieves its maximum profit. Most
businesses don’t achieve profit maximisation due to pressure from stakeholders, regulators etc
… they aim for a satisfactory level of profit instead. To achieve profit maximisation a business
may have to sacrifice other objectives, such as concern for the environment, social
responsibility and employee welfare.
 Higher dividends for shareholders.
 More profit can be used to finance research and development.
 Higher profit makes the firm less vulnerable to takeover.
 Higher profit enables higher salaries for workers
Sales maximisation
Involves business selling as much as possible in a period of time. Sales levels are an important
measure of performance and generally growing sales is a healthy sign for a business. Might be
used by entrepreneur to win a larger market share. This might be important when you first start
trading
 Increased market share increases monopoly power and may
enable the firm to put up prices and make more profit in the long
run.
 Managers prefer to work for bigger companies as it leads to
greater prestige and higher salaries.
 Increasing market share may force rivals out of business. E.g. the
growth of supermarkets have lead to the demise of many local
shops. Some firms may actually engage in predatory pricing
which involves making a loss to force a rival out of business.

Market share
If business can get a larger market share this should help increase revenues and raise the profile
of the business in the market. If a business can build a bigger market share then its rivals, it may
be able to dominate the market. This might mean that it has more control over prices. A larger
market share also means that output levels will be higher so a business might be able to lower
its costs. This will increase profit marines and generate more profit for owners.
A higher market share puts companies at a competitive advantage. Companies with high
market share often receive better prices from suppliers, as their larger order volumes increase
their buying power.
-economies of scale
Cost efficiency
If costs are lower, profit margins will be higher. Business with lower costs migth also gain a
competitive edge in the market. Cutting costs:
-lay off staff to cut labour costs
-find cheaper suppliers
-develop new working practice
One drawback of cutting costs is the product quality or customer service suffers

Employee welfare
Increases motivation and productivity.
Lowers voluntary turnover
Reduces Employee Absenteeism
Reduces long-term HR costs
Boosts Employee Productivity
Achieved by:
- Improving working envirmental by making it clean, less noisy and less crowded.
- Ensuring staff are given proper breaks
- Ensuring staff are well equipped with necessary tools and equipment

This improves the businesses image and helps comply with health and safety legislation

Customer satisfaction:
Retaining satisfied customers is cheaper than acquiring new ones
Obtaining the attention of prospective customers, gaining their interest and converting them
costs up to 6 times more than retaining existing customers. This is why it’s worth focusing and
spending resources on keeping existing customers satisfied with your goods and services.
Customer satisfaction promotes customer loyalty
As long as you can retain trusting and loyal relationships with customers and keep them
satisfied, they will keep on coming back to buy from you.
Increases Brand Popularity
Done by:
-train employees in communication
- provide a platform for customer feedback
-interact with customers using social media
-deal with customer complaints promptly and effectively

Social objectives
One that is concern for the local area. A business should aim to promote prosperity and
develop a stronger relationship with the local community so it can co-exist, this migth involve:
- Keeping Nosie level down
- -maintain sensible opening hours
- Care for the environment
- Providing employment for local people

You might also like