Business policy unit 2

BBA 3rd sem

Business Objectives

Business Objectives are specific, measurable goals that organizations aim to

achieve within a set timeframe to fulfill their mission and vision. These
objectives guide decision-making and resource allocation, focusing on
various dimensions such as financial performance, market share, customer
satisfaction, operational efficiency, innovation, and social responsibility. By
setting clear objectives, businesses can drive growth, enhance performance,
and ensure long-term success. Objectives also serve as benchmarks for
evaluating progress, identifying areas for improvement, and making
informed strategic decisions to stay competitive and responsive to market
changes.

1. Financial Objectives:
 Profitability: Increasing net profit margins.
 Revenue Growth: Boosting sales and income.
 Cost Reduction: Minimizing expenses and enhancing efficiency.
 Return on Investment (ROI): Maximizing returns on investments
and assets.

2. Strategic Objectives:
 Market Expansion: Entering new markets or regions.
 Product Development: Innovating and launching new products.
 Competitive Positioning: Strengthening market position relative to
competitors.
 Diversification: Expanding product lines or services to reduce risk.

3. Operational Objectives:
 Efficiency: Streamlining processes to Reduce waste and increase
productivity.
 Quality Improvement: Enhancing the quality of products or services.
 Supply Chain Optimization: Improving logistics and supply chain
management.
 Customer Service: Reducing response times and improving service
quality.

4. Market-Related Objectives:
 Market Share: Increasing the company’s share of the market.
  Customer Acquisition: Attracting new customers.
 Customer Retention: Keeping existing customers loyal.
 Brand Awareness: Raising the profile and recognition of the brand.

5. Customer-Centric Objectives:
 Customer Satisfaction: Improving customer experience and
satisfaction Levels.
 Customer Loyalty: Building long-term Relationships and repeat
business.
 Customer Engagement: Enhancing. Interaction and engagement
with. Customers.

6. Social Responsibility Objectives:

 Sustainability: Reducing environmental impact and promoting

sustainability.
 Corporate Social Responsibility (CSR): Engaging in ethical
practices. And community support.
 Philanthropy: Contributing to social causes and charitable activities.

7. Human Resources Objectives:

 Employee Satisfaction: Enhancing employee morale and job

satisfaction.
 Talent Acquisition: Attracting and hiring top talent.
 Training and Development: Providing opportunities for employee
growth and skill development.
 Retention: Reducing employee turnover and retaining valuable staff.

8. Innovation Objectives:

 Product Innovation: Developing new and improved products.

 Process Innovation: Implementing new processes or improving
existing ones.
 Technology Adoption: Leveraging new technologies to gain
competitive advantage.
 Research and Development (R&D): Investing in R&D to drive
innovation and growth.

Business Objectives Hierarchy:

The hierarchy of business objectives helps organize goals from the

broadest, most strategic level down to the more specific, operational
level. This structure ensures alignment throughout the organization
and provides a clear roadmap for achieving the overall mission and
vision.

1. Corporate Objectives:

 Mission Statement: To innovate and deliver high-quality

technology solutions that enhance people’s lives.
 Vision Statement: To be the global leader in technology
innovation by 2030.
 Strategic Goal: Increase global market share by 20% over the
next five years.

2. Business Unit Objectives:

 Marketing Division: Achieve a 15% increase in brand recognition

in new markets within two years.
 R&D Division: Develop three new product lines by the end of the
fiscal year.

3. Departmental Objectives:

 Marketing Department: Launch a new digital marketing

campaign targeting the Asia-Pacific region within six months.
 Sales Department: Improve customer acquisition rates by 10% in
the next quarter.

4. Individual Objectives:

 Marketing Manager: Increase social media engagement by 25%

over the next three months.
 Sales Representative: Close 20 new deals per month to meet
departmental sales targets.

Primary Objectives:

These are the objectives for which a company has been started. Every
business aims to earn more and more profits out of its working.
Primary objectives are related to the company and not to individuals.
Earning of profits out of providing goods and services to the customers
is the primary objective of a company. The goods and services are
provided as per the requirements of customers. Earning profits through
customer satisfaction helps in earning goodwill and regular clientele.
The production of goods and services as per determined targets will be
achieved through individual goals of employees in the organization.

Secondary Objectives:

These objectives help in achieving primary objectives. The targets are

identified and efforts are made to increase efficiency and economy in
the performance of work. The goals dealing with analysis, advice and
interpretation provide support to goals directed by primary objectives.
Secondary objectives, like primary objectives, are impersonal in nature.
The primary goal of earning profits through providing goods and
services will be achieved if there is a plan to add new products in the
market at regular intervals. The goal of adding new products will be a
secondary goal which will help in achieving the primary objective.

Individual Objectives:

These are the goals which individual members in an organization try to

achieve on daily, weekly, monthly or yearly basis.
These objectives are achievable as subordinate to primary and
secondary goals. Most of the individual objects are economic,
psychological or non-financial rewards which an individual tries to
achieve by using resources of time, skill and effort. An individual tries
to satisfy his needs and desires by working in an organization. In order
to motivate individuals for raising their performance, Organizations
offer varied incentives.

Social Objectives:

These are the goals of an organization towards society. These include

the obligations required by the community, government agencies etc.
These also include goals intended to further social, physical and
cultural improvement of the society. Social obligations of business has
become essential these days. Business has to produce goods and
services by taking into consideration health requirements of people.
There are expectations that business should also spent a part of its
profits for the welfare of Community.
 Hierarchy of Objectives:

Objectives form a hierarchy ranging from the broad aim to specific

individual objectives. At the top of it the main goals of the organization

are set. The

 organization has to see its responsibilities towards society and then
towards herself. The organization is required to contribute to the
welfare of society by providing good quality products at reasonable
cost. The main purpose of the business is to provide a specific level of
services or a proper type of goods. The overall objectives of the
organization are specified at the top level management.
The objectives of the key areas are also determined at the higher level
management. The next in hierarchy comes the objectives of divisions
and departments and units and these are decided at middle level
management comprising Vice-president or functional managers. The
objectives of individuals are decided at the bottom of the hierarchy.
The junior level management sets performance standards of
individuals.

• Top Down and Bottom up Approach:

There is some controversy whether the objectives should be fixed at

top down or bottom up. In the top down approach upper level
managers set objectives for the subordinates while in the bottom up
approach subordinates initiate the setting of objectives of their
positions and present them to their superiors. The proponents of the
top down approach are of the view that overall objectives of the
organization should be set at Chief Executive Officer level of top level
of management. It will provide a proper synchronization of objectives
of different areas and individuals.

On the other hand the supporters of bottom up approach argue that

top management needs to have information from lower levels in the
form of objectives. Since subordinates fix their own goals they will be
motivated and committed to their performance. It may not be
advisable to rely entirely on one approach. Both the approaches should
be used wisely for better results. In a practical situation such decisions
are linked to factors such as the size of the organization, the
organization culture, leadership style of the executive and the urgency
of the plan.

Setting of objectives, Key areas involved

Setting Business Objectives is a critical process that helps define the
direction and goals of an organization. These objectives provide a
roadmap for the business and its employees, guiding decision-making
and measuring success.

1. Understand the Purpose and Vision

 Purpose: Clarify the fundamental reason for the existence of
your business. This encompasses the core mission and the
primary value it aims to deliver to customers and stakeholders.
• Vision: Outline the long-term aspirations and the desired future
state of the business. This vision should be inspiring and ambitious,
serving as a motivating force for the entire organization
2. Analyze the Current Situation
 SWOT Analysis: Conduct a thorough analysis of the business’s
Strengths, Weaknesses, Opportunities, and Threats. This helps in
understanding the internal capabilities and external
environment.
 Market Analysis: Evaluate market trends, customer needs, and
competitive landscape. This provides insights into where the
business stands and potential areas for growth or improvement.

3. Define SMART Objectives : Ensure that each objective adheres to

the SMART criteria:
• Specific: Clearly define what is to be achieved. Avoid vague
or broad statements.
• Measurable: Establish criteria for measuring progress and
success.
• Achievable: Set realistic goals that are within the capability
of the organization.
• Relevant: Align objectives with the overall mission, vision,
and strategic plan.
• Time-bound: Specify a timeframe for achieving the
objectives.
4. Set Short-term and Long-term Goals:
 Short-term Goals: Focus on immediate actions and
achievements, typically within a year.. These should be
stepping stones toward long-term objectives.
 Long-term Goals: Envision broader, more ambitious targets
to be achieved over several years. These should be aligned
with the strategic vision of the company.
 5. Involve Key Stakeholders: Engage with key stakeholders,
including employees, management, investors, and customers, to
gather input and build consensus. This ensures that objectives are
realistic and supported by those who will be responsible for
achieving them.
6. Develop Action Plans: Break down each objective into actionable.
steps and assign responsibilities. An action plan should be:
 Specific tasks to be completed
 Resources required
 Responsible individuals or teams
 Deadlines for each task
 Monitor and Evaluate Progress
7. Establish a system for regularly monitoring progress
towards objectives.
This can include:
 Key Performance Indicators (KPIs): Metrics that help measure
progress and performance.
 Regular reviews and feedback sessions
 Adjustments to objectives and plans as necessary based on
performance data and changing circumstances.

8. Communicate Objectives Clearly : Ensure that all employees

understand the business objectives, their importance, and their role
in achieving them. Clear communication fosters alignment and
commitment across the organization.

Examples of Business Objectives

1. Financial Objectives: Increase revenue by 15% in the next fiscal
year; achieve a profit margin of 20%.
2. Customer Objectives: Improve customer satisfaction scores by 10%;
acquire 1,000 new customers within six months.
3. Operational Objectives: Reduce production costs by 5%; improve
supply chain efficiency by 10%.
4. Employee Objectives: Increase employee engagement scores by
20%; implement a professional development program for 100
employees.

Key areas involved in Business Objectives:

1. Financial Objectives
 Revenue Growth: Targets for increasing sales and overall income.
 Profitability: Goals related to profit margins, net income, and cost
management.
 Cost Management: Objectives focused on reducing operational
costs and improving cost efficiency.
 Investment and Returns: Goals for investments, returns. On
investment (ROI), and financial planning.

2. Customer Objectives
 Customer Acquisition: Targets for gaining new customers or expanding
market share.
 Customer Retention: Objectives aimed at improving customer loyalty
and reducing churn rates.
 Customer Satisfaction: Goals related to enhancing the customer
experience and satisfaction levels.
 Market Penetration: Increasing the presence and impact in existing
markets or entering new markets.
3. Operational Objective
 Efficiency and Productivity: Goals to enhance operational efficiency,
reduce waste, and improve productivity.
 Quality Improvement: Objectives focused on improving the quality of
products or services.
 Supply Chain Management: Enhancing the efficiency, reliability, and
sustainability of the supply chain.
 Innovation and Development: Goals for product development,
innovation, and technology adoption.

4. Employee and Organizational Development Objectives

 Employee Engagement: Improving employee engagement, and morale.

Satisfaction,
 Training and Development: Providing opportunities for employee
growth, skill development, and career advancement.
 Talent Acquisition and Retention: Attracting and retaining top talent
within the organization.
 Leadership Development: Cultivating leadership skills and preparing
future leaders within the organization.

5. Market and Competitive Objectives

  Market Share: Increasing the company’s share in the target
market.
 Competitive Positioning: Strengthening the company’s position
Relative to competitors.
 Brand Awareness and Loyalty: Enhancing brand recognition,
reputation, and customer loyalty.
 Expansion: Entering new markets, geographical regions, or
product segments.

6. Sustainability and Social Responsibility Objectives

 Environmental Impact: Reducing the environmental footprint and
promoting sustainability practices.
 Corporate Social Responsibility (CSR): Engaging in initiatives that
benefit society and enhance the company's social responsibility
profile.
 Ethical Practices: Ensuring business operations are conducted
ethically and transparently.
 Community Engagement: Building and maintaining positive
relationships with the communities in which the business
operates.