Business objectives
Need & Importance of Business Objectives
Business objectives = the aims or targets a business wants to achieve. Every business needs clear objectives because they guide the whole organisation.
Why objectives are important
Give direction: Workers and managers know exactly what they are working towards.
Motivates employees: Clear goals keep everyone focused and encouraged.
Better decision-making: Managers can check — “Will this decision help us reach our objective?”
Creates unity: Everyone works together towards the same target.
Measure success: Businesses can compare their actual performance with the objective.
Different types of business objectives
Different businesses have different aims depending on why they were created.
Common objectives in private-sector businesses
1. Survival
New businesses or businesses during recession focus on staying open.
If new competitors enter the market, the business may feel unsafe.
To survive, managers may lower prices, even if profit per item becomes less.
2. Profit
Businesses owned by private individuals aim to make profit.
Why profit is important
Gives return to owners for the money and risk they invested.
Provides finance for future expansion.
Do businesses always aim for maximum profit?
Not always.
If they increase prices too much, customers may stop buying.
High prices attract new competitors → reduces long-term profit.
Many owners just aim for satisfactory profit, not maximum, to avoid too much work or high taxes.
3. Returns to Shareholders
Shareholders own limited companies.
Managers aim to increase returns so shareholders don’t sell their shares.
Returns increase through:
Higher profits → higher dividends
Higher share price → achieved by good future plans and business growth .This also helps managers keep their jobs.
4. Growth of the Business
Businesses may want to grow in sales or output.
Benefits of growth
Workers get more job security
Managers get higher salaries and status
Reduces risk by entering new markets/products
Increases market share
Gains economies of scale (lower costs when business expands)
But growth happens only if customers are satisfied.
5. Market Share
Market share shows how much of the total market a company controls.
Formula
Market share (%) = (Company sales ÷ Total market sales) × 100
Example: If the market is $100m and Company sells $20m → 20% market share
Benefits of higher market share
Better publicity (“Most popular brand”)
More power over suppliers
More influence over customers, including pricing
6. Service to the Community (Social Enterprises)
Social enterprises are private businesses but not purely profit-driven.
They have three goals:
Social
Provide jobs/support to disadvantaged people (disabled, homeless, etc.)
Environmental
Protect the environment
Financial
Make profit only to reinvest in social work, not for personal gain
Example:RangSutra (India) – Helps poor villages sell handicrafts at a fair price.