Chapter 2 Business Objectives Lesson 1 Topic: Business Objectives Lesson Objectives: • To understand the importance of business objectives • To differentiate between financial and non financial objectives Keyword: Business Objectives, Profit, Market share Starter What are your objectives this new academic year? Why do we need to set objectives? Why do businesses need to set objectives? Review Recap different business oganisations in country Private: owned and run by individuals Public: owned by run by government Non profit making : To meet needs What are Business Objectives? Business objectives are goals and targets that a business wants to achieve. Every business should have an objective of what they would like to achieve. Importance of clear business objectives 1. Employees need something to work towards. 2. It gives motivation to the business owner. 3. It gives the business direction and focus. 4. It is easier to monitor the performance of the business against the objectives. Financial objectives and Non-financial objectives Financial Objectives 1. 2. 3. 4. 5. 6. The survival of the business To make profit To increase sales To increase market share To achieve financial security To improve the image of the business Non-Financial Objectives 1. 2. 3. 4. To meet social objectives To achieve personal satisfaction To overcome a challenge To gain independence and control Public sector Objectives 1. To increase response time of emergency services 2. To reduce crime rates 3. To reduce road accidents 4. To immunize all children 5. To increase the number of students going to university FINANCIAL OBJECTIVES READING TASK- PAGE 12-13 The survival of the business: This means a business is a able to recover its costs and pay its running expenses. A small start up business may aim to survive in the first year. Once successful, the business then sets itself the objective of increasing profits or growing in size. To make profit: This means a business gets more revenue above their expenses. One way to increase profit is by reducing the cost. A business may get cheaper raw materials but this may affect the quality of their products if the raw materials are poor quality. To increase sales: A business might increase sales by offering discounts or reducing prices for a short period of time. To increase market share: A company's market share is its portion of total sales in relation to the market it operates within. To achieve financial security: It means the business has enough money saved to cover emergencies and their future financial goals. When a business financially secure, they wont worry so they can focus on other issues. To improve the image of the business: When people think about your business positively, they are likely to buy your products and services. READING TASK- PAGE 1415 NON- FINANCIAL OBJECTIVES To meet social objectives: Social Objectives are aspirations of positive intention towards the local area, aiming to promote prosperity and develop a strong relationship with in the society where the business in based. For example a business will want to ensure they do not pollute the environment, may charge fair prices or provide employment opportunities for people who live in communities. To achieve personal satisfaction: This is a sense of fulfillment that a business gets. An entrepreneur can create a business around his hobbies or interest and this will give him personal satisfaction. To overcome a challenge: A business may be set up to overcome certain challenges that they have identified. For example a business might want to tackle the problem of recycling. To gain independence and control: A business may want to be run and managed by its owners. For example a cooperative business means the all the owners decide what the objectives of the business. Hey make decision collectively and cooperate with each other. APPLICATION OF KNOWLEDGE 1. What is meant by business objective? 2. What evidence is there to suggest that CFS aims to maximise profits? 3. Who is likely to benefit most from such an objective? Plenary In the following examples, state the business objective that the company is trying to achieve: • The business owner wishes to increase the number of retail customers, so a large sale is conducted. • Senior executives knew there was only one way to expand the business and that was by buying the opposition. LESSON 2 Date: Topic: Business Objectives Lesson Objectives: To understand SMART objectives Starter Is it a ‘SMART Objective?’ I wish to pass all my exams this year. What makes an objective a ‘SMART Objective?’ What is a SMART target? S- Specific- Means it must be clear M- Measurable- Means it should be counted or have a value A- Achievable- Means you must be able to reach it R- Realistic- Means it must be practical T- Timely- Means there must be a completion time Is this business objective SMART? Ahmed Soap company mission statement To take over the world with our product by producing more and more soap. To conquer the universe with the products. Why? Is this business objective SMART? To increase our profit by 10 percent in the second year of business. To train 50% of our staff by the first half of the year. To reduce expenditure by 20% by the end of this year. Why? Mission Statements Mission statements are written statements that describes the general purpose of the business. Mission statement for an airline can be: To deliver superior flying experience for our customers. The Objectives can be: • To make all flights safe and secure. • To create a long lasting partnership with our customers. • To invest in modern technology and equipment. Class Activity: In your exercise books write mission statements for the following business: McDonalds Qatar Petroleum Class Activity Continued: Compare your mission statements to their actual mission statements. McDonalds Qatar Petroleum McDonald's mission statement 2013. To be our customers' favorite place and way to eat and drink. Qatar Petroleum mission statement. To maximize our contribution to the national wealth of Qatar and its national vision through safe, efficient and environmentally acceptable exploitation of the natural resources. Plenary: In your exercise books write a SMART business objective. You can create it for any business√ Lesson 3 Date: Topic: Business Objectives Lesson Objectives: • To understand factors that can change business objectives Starter What is the only thing that does not change? What does it mean for Business to evolve? How has Ooredoo evolved or changed? Case study- Why did Blackberry become unsuccessful? Case study- Why did Blackberry become unsuccessful? BlackBerry’s failure to keep up with Apple and Google was a consequence of errors in its strategy and vision. First, after growing to dominate the corporate market, BlackBerry failed to anticipate that consumers — not business customers — would drive the smartphone revolution. Second, BlackBerry was blindsided by the emergence of the “app economy,” which drove massive adoption of iPhone and Android-based devices. Third, BlackBerry failed to realize that smartphones would evolve beyond mere communication devices to become full-fledged mobile entertainment hubs. Why did Blackberry become unsuccessful? Discuss the reasons. Internal and External factors that can influence a change in business objectives The aims of a business can change over time. This can happen in response to either: 1. Internal factors – From within the business such as business growth 1. External factors - From outside the business such as an economic recession Factors that make businesses change their objectives 1. Response to market conditions: A change in market conditions can come from: Competitors: Who can change their prices, create new products or offer better service. This may attract customers away from your business. So a business may need to change their objectives. Low economic growth: This will affect people because they may not have enough money to buy the goods and services that a business makes. Factors that make businesses change their objectives 2. Technology: A change technology means a business can produce more and become efficient. 3. Performance: A business performing well could change their objectives to expanding but a business not performing well may need to change their objectives to survival. 4. Legislation: Such as government law could make businesses change their objectives to be environmentally friendly. 5. Internal factors: Such as finance available finance can influence a business objectives. Why business aims and objectives change as businesses evolve: • in response to market conditions, technology, performance, legislation, internal reasons. Plenary What social media have you stopped using and why?
