Business aims - Cambridge College Secondary Humanities

Business Aims &
Business Aims
An aim or goal is a statement of purpose
Business aims or goals describe the overall rationale of the
business; he reasons why the firm is in business
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Mission Statement
A mission statement is a written statement making clear to
all stakeholders a firm’s overall aims and values
It describes what the company wants to achieve and how it
wants to act
It sets out the vision and values of a business
It enables the stakeholders of a business to understand to
understand why the business is doing what it is doing!
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Difference Between Aims &
 General statement of purpose
 E.g. we want to grow business in European markets
 Measurable target
 E.g. we want to achieve sales of €10 million in European
markets in 2004
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Why Set Objectives
Objectives give business a clearly defined target
Plans can then be made to achieve these targets
Can help motivate employees
Enables business to measure progress towards to its stated
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Criteria for Business Objectives
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Levels of Business Objectives
Objectives are set at various levels in a business
Corporate objectives
 Targets the whole business is trying to achieve
 Often related to what the owners of the business want to focus
on (e.g. survival, growth, profits)
Departmental objectives
 Objectives for specific functions in the business
 E.g. objectives for the marketing department to achieve
 Need to be consistent with corporate objectives
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Typical Business Objectives
Growth say by increasing sales and/or market share e.g. from 10%
to 20% in next 12 months. Growth often allows firms to enjoy the
benefits of
 Economies of scale and the competitive advantage that comes from
the resultant lower unit costs
 Market leadership and the enhanced ability to set a price that meets
 Higher profits which mean higher salaries for managers and a higher
share price for owners.
Profit say increasing return on capital employed to 5% by 2004 or
improving earnings per share to maximise shareholder value and
generating funds to support investment further and growth. Can
mean making cost reductions a target
Survival small and simply want to continue in business by reaching
break even within 12 months
Newly established firms may want to establish themselves in the
market and ‘get known’ – they expect initial losses
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Reasons Why Business Objectives
Change Over Time
A business may achieve an objective and will need to move
onto another one
 E.g. survival in first year may lead to an objective of increasing
profit in second year
Competitive environment might change
 E.g. launch of new products from competitors
Technology might change product designs
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Main Conflicts in Business
Growth versus profit
 E.g. achieving higher sales in short term (by cutting prices) will
reduce short-term profit
Short-term versus long-term
 E.g. business may decide to accept lower cash flows in shortterm whilst it invests heavily in new products or plant and
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Objectives of Public Sector
Required to deliver more than just a profit for shareholders
Many provide a form of public service (e.g. Royal Mail, BBC)
in addition to commercial activities
May be involved with monitoring or control of private sector
 E.g. Inland Revenue controls payment of tax by individuals and
Aims of such enterprises would include ensuring compliance
with law rather than, say, achieving a profit
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