Chapter 4

BUSINESS STUDIES
BUSINESS
OBJECTIVES
 The importance of business objectives:

Helps to direct, control and review the success of business

activities
To use resources efficiently towards final goals
To check back whether business is on track
When required, objectives may change so can plans
Business objectives need to meet the SMART criteria's:
 Specific
 Measurable
 Achievable
 Realistic and Relevant
 Time-specific
 Corporate aims:

Long-term goals business  Profit satisficing

hopes to achieve  Growth
Central purpose of a  Increasing market share
business is expressed  Survival
through corporate aims  Corporate social
Long-term, far thought
responsibility (CSR)
objectives  Maximizing short-term
Corporate objectives sales revenue
consist of:  Maximizing shareholder
 Profit maximization
value
 Mission statements:

What are mission statements?

How do they benefit?
 Inform outside groups about business’ central aims
 Works as a motivating factor to employees
 Includes moral or valued statements
 Provides detailed working objectives

• How could they be drawbacks?

 Could be vague in general
 Based on public relations
 Virtual analysis impossible
 Usually common and woolly
 Mission statement, objectives, strategies, tactics

Relationship between mission, objectives, strategy

and tactics
Objectives and decision making (stages in decision
making framework)
How corporate objectives might change (from
survival to profit making, from growth to recession,
from short-term to long-term objectives)
 Factors that determine the corporate objectives of a business:

• Corporate culture
• The size and legal form of business
• Public-sector or private-sector business
• The number of years the business has been operating
• Divisional, departmental and individual objectives

• Management by objectives (MBO)

• Communicating objectives through: employees and
managers achieving more, employees seeing the overall
plan, creating shared employee responsibility, managers
more easily staying in touch with employees.
Ethical influences on business objectives and decisions

Child labour?
Bribing?
Investment on harmful companies?
Harmful animal food?
Short term profit to cause less pollution?
Other employees paid more while others are made
redundant?
Save costs by closing factory?
Low wages could be paid if laws are weak in a country?
 Evaluating ethical decisions:

Problems:
Business costs may increase having ethical suppliers
Significant sales might drop if bribes are not taken
Limiting advertisement of children toys, for example
can reduce ‘pester-power’
Accepting price fixing is wrong could reduce profit
Paying low wages may exploit workers by using them
more than required
 Evaluating ethical decisions (cont.):

Benefits:
Expensive court cases can be avoided
Bad publicity can be avoided
Easy to work as CSR and gain ethical customers
Government contracts are awarded for being ethical
Being ethical can attract well-qualified employees