1.3 Setting Business Aims and Objectives
Aims vs Objectives
Aims
- The overall purpose or direction of the organisation
- Broad, long-term goals focussed on outcomes
Example: A football club’s aim might be to win the league
Objectives
- Shorter-term targets that the organisation sets to achieve its aims
- Specific, measurable, achievable, relevant, and time-bound (SMART) targets
Example: A football club’s objectives might be how they win the league, such as winning the next seven matches, gaining a specific number of points, and improving player’s penalty-taking training
Understanding Business Aims
The aims of a business will depend on what it wants to achieve. This will vary between businesses. Common aims are:
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Survival
- Staying in business!
- Especially important for new businesses — most fail within the first five years
Business Expansion
- Growing the business
- Opening new branches
- Launching new products
- Moving into new areas or countries
Improve Customer Satisfaction
- Providing products and services which makes customers happy
- Happy customers will purchase from you again
Maximise Profit
- An important aim for most businesses
- Without profit, a business may fail
- It can take a long time for a new business to make a profit
Increase Market Share
- The market is the total number or value of products from all businesses
- A businesses market share is their proportion of sales within that market
- Increasing your market share will decrease your competitor’s market share
Improve Social & Ethical Behaviour
- Doing what is right for society
- Can include treating staff well, banning testing on animals, and looking after the environment
- Businesses may behave ethically because it’s the right thing to do, or because it can improve sales
Increase Shareholder Value
- Shareholders are entitled to a share of the business's profits
- If a business is doing well, investors will want to buy more shares and will pay a higher price for them. This increases the company’s value
Business Objectives
Business objectives, which are shorter-term targets to help a business achieve its aims, should be:
- Actionable steps / milestones which a business uses to achieve its aims
- Specific, measurable, achievable, relevant, and time-bound (SMART)
SMART
SMART is an acronym you will hear a lot. It stands for:
Specific
A single, clear, focussed goal
Measurable
A clear definition of success
Attainable
Challenging, but possible to achieve
Relevant
Aligned to the business needs
Time-bound
A defined, achievable deadline